iShares Treasury Floating Rate Bond ETF (TFLO) at a 52-week high – May 2, 2022

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The iShares Floating Rate Treasury Bond ETF (TFLO Free Report) is probably a suitable choice for investors looking for momentum. TFLO hit a 52-week high and is up from its 52-week low of $50.25/share.

Let’s take a look at TFLO and its near-term outlook to gauge where it might be headed.

TFLO in a nutshell

The iShares Treasury Floating Rate Bond ETF seeks to track the investment results of an index composed of floating rate US Treasury bonds. It has an AUM of $846.2 million and charges an expense ratio of 15 basis points.

Why the move?

Market participants continue to struggle with rising Treasury yields and the Fed’s aggressive stance on interest rate hikes to control inflation levels. Fed Chairman Jerome Powell announced aggressive rate hikes this month. In this regard, Powell mentioned during the International Monetary Fund’s debate on the global economy that it would be “appropriate in my view to move a little faster,” as noted in a CNBC article. He also mentioned that “I also think there is something to be said for front loading any accommodation that one deems suitable. … I would say 50 basis points will be on the table for the May meeting.”

This increased the appeal of floating rate bonds. The coupons of these bonds being adjusted periodically, they are less sensitive to a rise in rates compared to traditional bonds. This makes funds like TFLO an impressive investment option.

More wins to come?

It looks like the iShares Treasury Floating Rate Bond ETF will remain strong, with a positive weighted alpha of 0.40, giving hints of a further rally.

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