Short-Term Treasury ETF (SCHO) Hits New 52-Week High

For investors seeking momentum, Schwab Short-Term U.S. Treasury ETF SCHO is probably on the radar. The fund just hit a 52-week high and is up 2.6% from its 52-week low price of $47.65/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 of where it might be headed:

SCHO in Focus

Schwab Short-Term U.S. Treasury ETF offers exposure to the short-term U.S. Treasury bond market with an average maturity of 2 years and an effective duration of 1.90 years. SCHO charges 3 bps in annual fees (see: all the Government Bond ETFs here).

Why the Move?

The Treasury corner of the fixed-income world has been an area to watch lately, given the Fed rate cut bets this month. The recent batch of data has renewed concerns over the economy's health, bolstering expectations of a rate cut from the Fed this month. Traders now price in a 71% chance that the Fed could cut rates by 25 bps at its next meeting and just a 29% chance of a 50-bps rate cut, according to CME Group FedWatch Tool.

More Gains Ahead?

Currently, SCHO 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, a weighted alpha of 2.45 and a low 20-day volatility of 2.1% show that there is definitely still some promise for risk-aggressive investors, who want to ride on this surging ETF.

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