The WisdomTree Floating Rate Treasury Fund (USFR Quick QuoteUSFR - Free Report) is probably a suitable pick for investors looking for some momentum. USFR hit a 52-week high and is up from its 52-week low price of $25.09/share.

Let’s look at USFR and its near-term outlook to gauge where it might be headed.

USFR in Focus

The WisdomTree Floating Rate Treasury Fund seeks to track the price and yield performance, before fees and expenses, of the Bloomberg U.S. Treasury Floating Rate Bond Index. It has an AUM of $2.76 billion and an expense ratio of 15 basis points.

Why the Move?

To control hot inflation readings, the Federal Reserve approved a 0.25 percentage point rate hike (the first increase since December 2018) on Mar 16.

Following this hike, the benchmark interest rates will fall into a 0.25-0.5% range. At the same time, while taking an aggressive approach to increasing the rates, the central bank informed about plans to increase interest rates six times this year. The Federal Reserve is aiming at a consensus funds rate of 1.9% by 2022 end (per a CNBC article).

This raised the appeal for the floating rate bonds. Since the coupons of these bonds are adjusted periodically, they are less sensitive to an increase in the rates compared to the traditional bonds. This is making funds like USFR an impressive investment option.

More Gains Ahead?

It seems as if the WisdomTree Floating Rate Treasury Fund will remain strong, with a positive weighted alpha of 0.20, which gives cues of a further rally.