TCW Relative Value Large Cap Strategy

Quarterly Commentary

June 30, 2019

Key Issues

  • Early in the second quarter, economic data suggested a rosier outlook for the U.S. economy and reports out of China showed growth in exports, employment, and orders. Also, there was increased optimism for a U.S./China trade deal and a continued dovish view from the U.S. Federal Reserve. The preliminary reading for 1Q:19 U.S. GDP came in at 3.2%+ (with the second and third readings just a touch lighter at 3.1%), higher than estimates. This marks the first time since 2015 that growth in the first quarter topped 3%. In May, U.S. equities fell primarily from a setback in U.S./China trade negotiations. While the two sides appeared close to an agreement, optimism was upended by President Trump’s announcement on May 5 the U.S. would increase tariffs on $200 billion of Chinese imports to 25% from 10% with the added threat on an additional $325 billion. China, unsurprisingly, countered with new tariffs on $60 billion of U.S. imports. Additionally, just after agreeing to lifting tariffs on metal imports from Mexico and Canada mid-month, Mr. Trump threatened to impose tariffs on Mexican imports in retaliation to the migrant issue at the countries’ shared border, only to reverse after the two sides came to an agreement. Even amidst trade tensions, U.S. equities rallied strongly in June due in part to the increased likelihood of a Fed rate cut. Although the Committee took no action at its June meeting, investors largely expect rate cuts this year, perhaps as early as July when it next convenes. Additionally, European Central Bank President Draghi said the zone’s central bank is prepared to provide more stimulus to combat economic sluggishness and is ready to cut interest rates which are already at/near zero. Finally, stocks got a boost after Presidents Trump and Xi reaffirmed their intent to meet at the G-20 in Osaka at the end of June...

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Media Attachments

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

Investing in any strategy has risks. 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. 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 investments entail equity 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.

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.