Investors looking to avoid underperformance should steer clear of iShares Core U.S. Aggregate Bond ETF (AGG Quick QuoteAGG - Free Report) . The fund recently hit a new 52-week low. Shares of AGG are down roughly 3.2% from its 52-week high of $110.66/share.

But is more pain in store for this ETF? Let’s take a quick look at the fund and the near-term outlook to get a better idea of where it might be headed.

AGG in Focus

AGG focuses on providing exposure to government as well as corporate bonds with intermediate maturity, thereby exposing investors to moderate levels of interest rate risk. The fund has an effective duration of 5.89 years and a weighted average maturity of 8.36 years. AGG charges 5 basis points in fee per year and has AUM of $53.5 billion (see all Government Bond ETFs here).

Why the move?

Bond yields have been on an upward trend lately, as investors grow optimistic about the economy and bet on growing inflation. U.S. 10-Year Treasury yields rebounded to a near four-year high of 2.85%. Bond yields and prices move inverse to each other. Moreover, the Fed is widely expected to hike interest rates multiple times this year to tame inflation, and markets are betting on the Fed to hike rates more than three times suggested by Fed earlier. Per the CME Fed Watch tool, there is a 71.9% chance of a 25 basis point rate hike in March.  

More Losses Ahead?

AGG has a weighted alpha of -2.20. So, the outlook for this fund remains quite bleak.

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