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TIPS ETF (STPZ) Hits New 52-Week High

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For investors seeking momentum, PIMCO 1-5 Year U.S. TIPS Index Fund (STPZ - Free Report) is probably on radar now. The fund just hit a 52-week high and is up 11% from its 52-week low price of $49.11/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:

STPZ in Focus

This ETF seeks to help investors preserve purchasing power against inflation with low default risk by seeking real returns primarily from TIPS. It targets the shorter maturity subset of TIPS, which historically has had less interest rate risk, a higher correlation to inflation, and lower volatility than a broad U.S. TIPS Index. The product charges 20 basis points in annual fees (see: all the Inflation-Protected Bond ETFs).

Why the Move?

The TIPS segment of the broad U.S. stock market has been an area to watch lately given the rising inflationary expectations. U.S. 10-year inflation expectations topped 2% for the first time since 2018. The rollout of COVID-19 vaccines along with the rise in raw materials prices such as copper and lumber should lift inflation.

More Gains Ahead?

It seems that STPZ might remain strong given a weighted alpha of 3.83 and a 20-day volatility of 0.8%. As a result, there is definitely still some promise for risk-aggressive investors who want to ride on this surging ETF.

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