For investors seeking momentum, Invesco Variable Rate Investment Grade ETF (VRIG Quick QuoteVRIG - Free Report) is probably on radar. The fund just hit a 52-week high and is up 2% from its 52-week low price of $24.76/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:

VRIG in Focus

Invesco Variable Rate Investment Grade ETF seeks to invest at least 80% of its net assets in a portfolio of investment-grade, variable rate instruments that are U.S. dollar-denominated and U.S.-issued. The product charges 30 bps in annual fees (see: all the Government Bond ETFs here).

Why the Move?

Floating rate bonds have been an area to watch lately, given the expectations for longer-than-expected higher rates. The Federal Reserve will take "longer than expected" to achieve the confidence needed to get inflation down to its 2% target after a series of upbeat data pointed to a resilient economy.

Floating rate bonds are investment grade and do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers. Since the coupons of these bonds are adjusted periodically, they are less sensitive to an increase in rates compared to traditional bonds. Unlike fixed-coupon bonds, these do not lose value when the rates go up, making the bonds ideal for protecting investors against capital erosion in a rising rate environment.

More Gains Ahead?

Currently, VRIG might remain strong, given a weighted alpha of 1.30 and 20-day volatility of 0.30%. As a result, there is definitely still some promise for risk-aggressive investors who want to ride this surging ETF.