Investment Grade Defensive ETF (IIGD) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors looking for momentum, Invesco Investment Grade Defensive ETF IIGD is probably a suitable pick. The fund just hit a 52-week high and is up 25.8% from its 52-week low price of $21.60/share.

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

IIGD in Focus

This ETF is based on the Invesco Investment Grade Defensive Index. The fund invests at least 80% of its total assets in securities that comprise the Index, which is designed to provide exposure to U.S. investment grade bonds with relatively higher-quality characteristics, including higher credit ratings and shorter maturities. It has AUM of $77 million and charges 13 basis points (bps) in annual fees.

Why the Move?

Amid the coronavirus crisis, the Fed has cut rates twice to zero in 2020 after three rate cuts in 2019. The Fed has also launched unlimited QE and agreed to buy highly rated  corporate bond. Per a Bloomberg report, the Fed has already purchased at least $1.8 billion of corporate bond ETFs. These are positive factors for the fund. Going on, the outbreak has caused an unprecedented collapse of economic activities as governments are forced to shut down commerce and implement social distancing measures in an effort to contain the spread of the virus. The job market is also getting disrupted as Americans are consistently filing claims for unemployment benefits.  Investors also seem to be worried about the simmering U.S.-China tensions. These factors are making funds like IIGD an attractive investment option.

More Gains Ahead?

It seems like the fund will remain strong, with a positive weighted alpha of 6.10, which gives cues of further rally.

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Invesco Investment Grade Defensive ETF (IIGD): ETF Research Reports
 
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