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Treasury Bond ETF (GOVT) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors looking for momentum, iShares U.S. Treasury Bond ETF GOVT is probably a suitable pick. The fund just hit a 52-week high, up roughly 11% from its 52-week low of $24.05/share.

But does it 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:

GOVT in Focus

GOVT tracks the ICE U.S. Treasury Core Bond Index before fees and expenses. The index measures the performance of U.S. dollar denominated, fixed rate securities with minimum term to maturity greater than a year and less than or equal to 30 years. GOVT is charging 15 bps in fees. The fund has amassed $13.96 billion in AUM.

Why the Move?

Escalating Sino-US trade war tensions are making investors jittery. Recently, China retaliated by imposing new tariffs of between 5% and 10% on $75 billion worth of goods from the United States, effective on some items from Sep 1 and others from Dec 15. Moreover, effective Dec 15, China has decided to reinstate a 25% tariff on U.S. automobiles and auto parts. To this, Trump responded by raising tariffs to 30% from 25% on $250 billion of Chinese imports effective Oct 1. Moreover, tariffs planned for Sep 1 on some Chinese imports will be revised to 15% from 10%. Also, the uncertainty in market conditions due to geo-political tensions and slowdown in the global economic growth are increasingly adding to the appeal of safe-haven picks like treasury bond ETFs.

More Gains Ahead?

Currently, GOVT has a Zacks Rank #3 (Hold) making it hard to get a handle on the fund’s future returns. However, it seems that GOVT might remain strong given a positive weighted alpha of 10.

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iShares U.S. Treasury Bond ETF (GOVT): ETF Research Reports
 
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