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Short-Term Bond ETF (BIL) Hits New 52-Week High

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For investors seeking momentum, SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 0.2% from its 52-week low price of $91.37/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:

BIL in Focus

This fund seeks to provide exposure to zero coupon U.S. Treasury securities that have a remaining maturity of 1-3 months. Both average maturity and effective duration comes in at 0.10 years. BIL charges 13 bps in annual fees (see: all the Government Bond ETFs here).

Why the Move?

Short duration bond ETF has been an area to watch given the growing inflationary pressure and rise in yields. A rise in energy prices, increase in raw material costs, and a historically low unemployment rate (which indicates that wages could finally pick up) has lifted inflation expectations, in turn fueling speculation of faster-than-expected rate hikes for this year. The short duration bond ETFs invest in securities with durations of less than one year, thus making them less vulnerable to rising rates. Since the time when maturity is short enough, the odds of a substantial increase in rates during the life of the bond are lower.

More Gains Ahead?

Currently, BIL has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. It seems that this fund might remain strong given a weighted alpha of 0.10% and a 20-day volatility of 0.42%. As a result, there is still some promise for investors who want to ride on this surging ETF.

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