TCW Relative Value Dividend Appreciation Fund

Quarterly Commentary

June 30, 2019

Investment Environment

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, ECB 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


Russell 1000® Value Index – Measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

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.

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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.

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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