Short-Term Treasury ETF (SHY) Hits New 52-Week High

For investors seeking momentum, iShares 1-3 Year Treasury Bond ETF SHY is probably on the radar. The fund just hit a 52-week high and is up 3% from its 52-week low price of $80.62/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 of where it might be headed:

SHY in Focus

iShares 1-3 Year Treasury Bond ETF offers exposure to the short-term U.S. Treasury bond market with remaining maturities between one and three years. It has an average maturity of 1.94 years and an effective duration of 1.85 years. SHY charges 15 bps 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, given the looming Fed rate cut. Inflation in the United States rose at the slowest pace in three years, raising confidence that the Fed will cut interest rates next week. Following the CPI report, investors’ bets on a 25-bps rate cut rose to 85% from 66% a prior day, as measured by the CME Fed Watch Tool.

More Gains Ahead?

Currently, SHY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, a weighted alpha of 2.92 and a low 20-day volatility of 2.07% show that there is definitely still some promise for risk-aggressive investors who want to ride on this surging ETF.

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