For investors seeking momentum, IQ Enhanced Core Plus Bond U.S. ETF is probably a suitable pick. The fund just hit a 52-week high and is up roughly 12.5% from its 52-week low price of $18.68/share.
Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:
AGGP in Focus
The fund seeks investment results that track (before fees and expenses) the price and yield performance of the IQ Enhanced Core Plus Bond U.S. Index. AGGP invests primarily, through exchange-traded products, in U.S. Treasurys, U.S. investment grade corporate bonds, and U.S. investment grade mortgage-backed securities, and can allocate up to 25% in U.S. high yield debt and up to 5% in U.S. dollar denominated debt of emerging market issuers. The fund charges 33 basis points in fees and has an AUM of $69 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, the U.K. and the United States is leading to increased speculations of a global recession by analysts. The U.S. stimulus package along with the Fed’s fiscal measures has addressed investor concerns regarding liquidity.
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%. It announced new initiatives on Mar 23 to support the markets and combat the pandemic. All these factors make investing in funds like AGGP more attractive.
More Gains Ahead?
It seems the fund will remain strong with a positive weighted alpha of 4.0, which gives cues of further rally.
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