Treasury ETF (EDV) Hits New 52-Week High

For investors seeking momentum, Vanguard Extended Duration Treasury ETF EDV is probably on the radar now. The fund just hit a 52-week high and is up about 39% from its 52-week low price of $110.85/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

EDV in Focus   

TLT offers diversified exposure to the long-term Treasury STRIPS market and holds 82 bonds in its basket. It has an average effective maturity of 25.1 years and average duration of 24.20 years. The product charges 7 basis points in annual fees (see: all the Government Bond ETFs here).

Why the Move?

The Treasury corner of the fixed-income world has been an area to watch lately on safe haven demand and the growing optimism over the Federal Reserve’s rate cut bets. The central banks across the globe are expected to step in to prop up the virus-infected economy. In particular, the Fed signaled its willingness to cut interest rates in its Mar 17-18 meeting to support the economy. Per the latest CME FedWatch Tool, there is a 100% chance that the Fed will slash rates in March while the fed funds futures market predicts more than 70% chance of a rate cut.

More Gains Ahead?

Currently, EDV has a Zacks ETF Rank #3 (Hold) with a High risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, a high weighted alpha of 36.20 and a low 20-day volatility of 17.3% for the ETF show that there is still some promise for risk-aggressive investors who want to ride on this surging ETF.

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Vanguard Extended Duration Treasury ETF (EDV): ETF Research Reports
 
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