For investors seeking momentum, Schwab Intermediate-Term U.S. Treasury ETF (SCHR - Free Report) is probably on radar now. The fund just hit a 52-week high and is up nearly 6.4% from its 52-week low price of $51.31/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:
SCHR in Focus
The underlying Bloomberg Barclays U.S. 3-10 Year Treasury Bond Index includes all publicly issued U.S. Treasury securities that have a remaining maturity of greater than or equal to three years and less than 10 years, are rated investment grade, and $250 million or more of outstanding face value.
The weighted average maturity of the fund is 5.6 years and the effective duration is 5.2 years. The fund charges 6 bps in fees and yields 2.23% annually (see: all the Government Bond ETFs here).
Why the Move?
The bond markets are having a great time thanks to a dovish Fed and rising U.S.-China trade tensions, which have triggered a flight to safety. Short-term bonds are yielding more than the intermediate and benchmark 10-year U.S. treasuries.
As on May 31, 2019, the yield on five-year U.S. treasuries was 1.93%. way below that of the that of the one-month, two-month, three-month, six-month, one-year and two-year bonds. This clearly explains the rally in this intermediate bond fund.
More Gains Ahead?
Currently, SCHR 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. However, the fund has a positive weighted alpha of 5.80, which hints at more gains. So, there is definitely still some promise for those who want to ride on this ETF a little longer.
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