Profit From Rising Interest Rates With This ETF (RISE)

From Zacks: Investors seeking momentum may have Sit Rising Rate ETF (RISE – Free Report) on radar now. The fund recently hit a new 52-week high. Shares of RISE are up approximately 9.3% from a 52-week low of $22.59/share.

But are more gains in the cards for this ETF? Let’s take a look at the fund and the near-term outlook to get a better idea of where it might be headed.

RISE in Focus

RISE seeks to profit from rising rates by tracking the Benchmark Portfolio Index before fees and expenses. The benchmark consists of exchange traded futures contracts and options on futures on two and five-year U.S. treasury contracts. The fund charges 100 basis points in fee per year and has AUM of $40.7 million (see all Government Bond ETFs here).

Why the move?

The Federal Reserve hiked interest rates by 25 basis points in Jerome Powell’s first meeting as chairman. The new benchmark funds rate was increased to a target of 1.5% to 1.75%. “The economic outlook has strengthened in recent months,” the committee said in its post-meeting statement, inviting speculation of a steeper path in rate hikes going forward in 2019 and 2020.  Fed officials increased their forecast for 2018 GDP growth from 2.5% in December to 2.7%.

More Gains Ahead?

RISE has a weighted alpha of 7.1. Although it doesn’t seem that appealing, given the current outlook on rate hikes going further into 2018, this ETF is poised to gain. So, there is a promising outlook ahead for those who want to ride this surging ETF a shade further.

The Sit Rising Rate ETF (RISE) was unchanged in premarket trading Friday. Year-to-date, RISE has gained 3.28%, versus a -1.20% rise in the benchmark S&P 500 index during the same period.

RISE currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 13 ETFs in the Non-Traditional Bond ETFs category.


This article is brought to you courtesy of Zacks Research.