Key facts
- Pimco and Capital Group funds bet on falling US interest rates in the first quarter.
- Capital Group's American Balanced Fund and Pimco's Total Return Fund increased US Treasury holdings.
- These funds also maintained long interest rate future exposures.
- These positions went against prevailing market expectations of sustained high interest rates.
Asset managers Pimco and Capital Group positioned their portfolios for a decline in US interest rates during the first quarter, diverging from the prevailing market sentiment that anticipated rates remaining elevated for an extended period. Filings at the end of the first quarter revealed that Capital Group's American Balanced Fund and Pimco's Total Return Fund both increased their holdings of US Treasuries. Additionally, these funds maintained long positions in interest rate futures, signaling an expectation of falling rates. This strategic positioning contrasted with the broader market's 'higher-for-longer' outlook on interest rates at the time.