Metwest High Yield Bond Fund

Quarterly Commentary


In a continuation of the themes that described the first half of the year, the third quarter was characterized by solid U.S. economic data across several dimensions. Jobless claims dropped to their lowest level in 49 years while GDP growth reflected a 4.2% annualized rate, underpinned by strong consumer and business spending as well as a surge in exports ahead of potential retaliatory tariffs from China. The equity market delivered a third quarter gain of 7.7%, with the S&P 500 reaching fresh record highs on the back of accelerating retail sales, strong corporate earnings and steady employment gains. Investors were also encouraged by constructive steps between the U.S. and Mexico on NAFTA re-negotiations, though details of the agreement remained less than certain as the quarter closed. While much of the macroeconomic data had a positive tilt, the beginning signs of weakness have started to show in the housing sector – the segment of the economy which has thus far been an engine for growth – as new home sales, housing starts, and building permits have disappointed. This is a particularly interest rate sensitive part of the economy and affordability is much lower than it has been in the past, particularly for the new homebuyer segment, as mortgage rates have climbed significantly over the past twelve months. Trade tensions with China are another source of concern, as multiple retaliatory tariff announcements by both administrations in July and September raised the ante in the trade battle between the two nations...

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Bloomberg Barclays U.S. Corporate High Yield Index 2% Issuer Cap – An unmanaged index that covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. The index limits exposures to a specific issuer to a maximum 2% by market value.

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About the Index or Indices

The index listed is not available for direct investment; therefore its performance does not reflect a reduction for fees or expenses incurred in managing a portfolio. The securities in the index may be substantially different from those in the Fund.

Forward Looking Statement

This report may include estimates, projections and other "forward-looking statements." Due to numerous factors, actual events may differ substantially from those presented. TCW assumes no duty to update any such statements.

About Performance
The performance data presented represents past performance and is no guarantee of future results. Total returns include reinvestment of dividends and distributions. Current performance may be lower or higher than the performance data presented. Performance data current to the most recent month end is available on the product detail page for each Fund. Investment returns and principal value will fluctuate with market conditions. The value of an investment in the Fund, when redeemed, may be worth more or less than its original purchase cost.
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A Word About Risk

Fixed income investments entail interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. Funds investing in bonds can lose their value as interest rates rise and an investor can lose principal.


High yield investments by the Fund in lower-rated and non-rated securities presents a greater risk of loss of principal and interest than higher-rated securities. The Fund may also not be suitable for all investors due to its use of sophisticated investment instruments such as derivatives.


Portfolio characteristics and holdings are subject to change at any time. Opinions expressed are current only as of the time made, and are subject to change without notice. While we have gathered this information from sources believed to be reliable, MetWest cannot guarantee the accuracy of the information provided. Source for the statistical and economic data cited in this report is Bloomberg. This commentary contains material that is protected, individually and collectively, by copyright, trademark or other proprietary rights of Metropolitan West Asset Management, LLC, or others as indicated.


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The MetWest Funds are advised by Metropolitan West Asset Management, LLC, which is a wholly-owned subsidiary of The TCW Group, Inc.