TCW Relative Value Balanced Strategy

Quarterly Commentary

March 31, 2019

Key Issues

  • Encouraged by domestic economic strength, strong corporate earnings, increased optimism on U.S. and China trade, and a more dovish Fed, U.S. stocks, as represented by the S&P 500, posted their strongest quarter since 3Q:09 despite concerns of slowing economic growth, Brexit, and the U.S. government shutdown. As of March 31, the unemployment rate is 3.8% and weekly jobless claims are at their lowest level since 1969. After three consecutive quarters of 20%+ EPS (year-over-year) growth, S&P 500 companies reported 4Q:18 earnings of 17% gross of tax relief (~10% net) fueled by 5-6% revenue growth. Early in March, the 3 Month–10 Year portion of the yield curve inverted causing recessionary fears to rise; however, the yield curve “righted” itself by month end. Outside the U.S., to counter its slowdown, China’s central bank lowered taxes and reserve rates and injected infrastructure spend while the European Central Bank announced it would offer cheap loans to banks in an effort to stoke lending and pushed out any rate hikes until 2020 at the earliest...

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Media Attachments

Note:
The equity component of this Balanced strategy is TCW Relative Value Large Cap.
For Information Only

This publication is for general information purposes only and is not intended  to offer investment advice or be the basis for an investment decision.

Not An Offer

Nothing in this document constitutes an offer to sell or the solicitation of an offer to buy securities. Investing in any strategy has risks.

Price Volatility

An account is subject to price volatility. The value of an account’s portfolio will change as the prices of its investments go up or down. Because an account typically invests in less than 40 equity securities at any time, it may have greater price volatility than a more diversified portfolio. Before embarking on the described investment program, an investor should carefully consider the risks and suitability of the described strategy based on their own investment objectives and financial position. The strategy will not invest in initial public offerings.

Forward Looking Statement

The information contained herein may include estimates, projections and other “forward-looking statements.” Actual events may differ substantially from those presented herein. TCW assumes no duty to update any such forward-looking statements or any other information or opinions in this document. TCW makes no representation that future investment performance will conform to past performance and it should never be assumed that past performance foretells future performance. TCW's portfolio managers make investment decisions based on various sources of information and analysis and are not necessarily based on the economic information set forth herein.

Past Performance

TCW makes no representation that future investment performance will conform to past performance and it should never be assumed that past performance foretells future performance. TCW's portfolio managers make investment decisions based on various sources of information and analysis and are not necessarily based on the economic information set forth herein.

A Word About Risk

Equity and fixed income investments entail equity risk, interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. The value of stocks and other equity securities will change based on changes in a company's financial condition and in overall market and economic conditions. Strategies investing in bonds can lose their value as interest rates rise and an investor can lose principal.

Subject to Change

Any opinions expressed are current only as of the time made and are subject to change without notice. TCW assumes no duty to update any such statements. The views expressed herein are solely those of the author and do not represent the views of TCW as a firm or of any other portfolio manager or employee of TCW. Any holdings of a particular company or security discussed herein are under periodic review by the author and are subject to change at any time, without notice. In addition, TCW manages a number of separate strategies and portfolio managers in those strategies may have differing views or analysis with respect to a particular company, security or the economy than the views expressed herein.


There is no assurance that any securities discussed herein will remain in an account; be purchased in the portfolio at the time this report is received or that securities sold have not been repurchased. It should not be assumed that any of the securities transactions or holdings discussed were, or will prove to be, profitable or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.