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Agency Bond ETF (AGZ) Hits New 52-Week High

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For investors looking for momentum, iShares Agency Bond ETF (AGZ - Free Report) is probably a suitable pick. The fund just hit a 52-week high and is up roughly 9.4% from its 52-week low price of $112.50/share.

Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

AGZ in Focus

The fund provides exposure to U.S. agency bonds, which are issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. It charges 20 bps in fees and has an AUM of $688.4 million.

Why the Move?

The coronavirus outbreak is believed to have disrupted global supply chains and economic activity. Moreover, the rate at which the outbreak is spreading in Italy, France, Spain, Germany, United Kingdom and the United States is leading to increased speculations of a global recession by analysts. The rapid spread of the virus is leading to increasing travel bans and cancellation of large events as well as shutting down of schools, colleges, universities, restaurants and bars and shopping malls. In such a scenario, a slowdown in global economic growth looks inevitable. The Fed has opted for emergency rate cuts twice in less than two weeks. The central bank has trimmed rates to a target range of 0% to 0.25%. All these factors make investing in fixed investment funds like AGZ more attractive.

More Gains Ahead?

It seems like the fund will remain strong with a positive weighted alpha of 7.4, which gives cues of further rally.

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