TCW Relative Value Balanced Strategy

Quarterly Commentary

December 31, 2018

Key Issues

  • The combination of tense trade negotiations between the U.S. and China, signs of slowing global economic growth, interest rate hike jitters, and the prospect of a protracted U.S. government shutdown triggered a dramatic sell-off in equities in the fourth quarter. Before being upended by the worst December since 1931, October’s S&P 500 performance was the worst month in more than seven years accompanied by a rare simultaneous decline in bond prices. U.S. equities bounced back in November though the road was bumpy. While the same causes that led to the sharp decline in October (and again in December) still hovered, investors had reasons to be optimistic. Early in the quarter, the Bureau of Labor Statistics report showed robust jobs growth in October along with 3.1% (year-over-year) wage growth and the unemployment rate at 3.7%, close to a fifty-year low. Stocks then got a big boost upon the outcome of the midterm elections which resulted in the Democrats taking back control of the House of Representatives. The markets rallied after Fed Chairman Jerome Powell’s speech on November 28 to the Economics Club of New York. However, November’s rosier outlook dissipated in December with fears of the Fed maintaining its independence, U.S. cabinet level/military disagreements, a partial U.S. government shutdown, and the looming March 1st U.S./China truce deadline...

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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.