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For investors looking for momentum, Vanguard Short-Term Treasury ETF VGSH is probably a suitable pick. The fund just hit a 52-week high and is up roughly 4% from its 52-week low price of $60.05/share.
Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:
VGSH in Focus
The fund seeks to provide current income with modest price fluctuation. It invests primarily in high-quality (investment-grade) U.S. government bonds. The fund charges 5 basis points in fees and has an AUM of $7.18 billion.
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 rapid spread of the virus is leading to sweeping travel bans and cancellation of large events, as well as shutting down of schools, colleges, universities, restaurants and bars and shopping malls. 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 VGSH more attractive.
More Gains Ahead?
It seems like the fund will remain strong with a positive weighted alpha of 3.5, which gives cues of further rally.
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