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Total Bond Market ETF (BND) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors seeking momentum, Vanguard Total Bond Market ETF BND is probably a suitable pick. The fund just hit a 52-week high and is up roughly 8.5% from its 52-week low price of $77.46/share.

But does this ETF have more gains in store? Let’s take a look at the fund and its near-term outlook to gain insight into where it might be headed:

BND in Focus

The underlying Bloomberg Barclays U.S. Aggregate Float Adjusted Index is composed of a wide range of public, investment-grade, taxable, fixed income securities in the United States including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than a year. The fund bears moderate credit risk. Given the fund’s intermediate-term duration, it is less sensitive to interest rate changes in comparison to long-term counterparts. BND is charging approximately 4 bps in fees.

Why the Move?

An intensifying US-China trade war with the imposition of 10% tariff on the remaining $300 billion of Chinese imports, effective Sep 1, has unnerved investors. Retaliating to the latest round of tariffs, China devalued its currency yuan to an 11-year low and reportedly stopped purchases of U.S. farm products. Moreover, geopolitical tensions and a slowdown in global economic growth are compelling investors to switch to safer options like fixed-income funds.

More Gains Ahead?

Given the uncertain market conditions, it is hard to get a handle on the fund’s future returns one way or another. However, it seems that BND might remain strong given a positive weighted alpha of 7.50.

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Vanguard Total Bond Market ETF (BND): ETF Research Reports
 
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