For investors looking for momentum, iShares U.S. Basic Materials ETF (IYM Quick QuoteIYM - Free Report) is probably a suitable pick. The fund just hit a 52-week high and is up 91.2% from its 52-week low price of $59.49/share.

Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

IYM in Focus

The fund provides exposure to U.S. companies involved with the production of raw materials, including metals, chemicals and forestry products. It has AUM of $880.4 million and charges expense ratio of 43 basis points, as stated in the prospectus.

Why the Move?

The materials sector, which is the most sensitive to global economic growth expectations, is gaining from a dovish Fed. Lower rates put pressure on the U.S. dollar that makes dollar-denominated materials cheap for foreign investors, raising demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, lower rates are a boon. The coronavirus vaccine rollout, introduction of the much-awaited fresh round of stimulus and the Fed’s continuous support to keep interest rates low have added to investors’ hope for a faster economic recovery in the United States. This is making funds like IYM an attractive investment option.

More Gains Ahead?

It seems like the fund will remain strong, with a positive weighted alpha of 27.97, which gives cues of further rally.

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