TCW Select Equity Fund I Cl · NASDAQ:TGCEX
TCW Select Equity Fund I Cl — TCW Select Equities Fund — 051314Pres
30 slides from TCW Select Equity Fund I Cl's investor presentation, May 13, 2014
Slide 1: Unwavering Focus on Growth: An Update on the TCW Select Equities Fund
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund May 13, 2014 Quality Growth Presented by: Craig C. Blum, CFA Brian M. McNamara Portfolio Manager Managing Director Opportunity Group Managing Director Analyst and Portfolio Specialist U.S. Equities U.S. Equities Brandon D. Bond, C
Slide 2: In a "Typical Year," There Are Multiple 5%+ Pullbacks in the Equity Market
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund In a “Typical Year,” There Are Multiple 5%+ Pullbacks in the Equity Market S&P 500 Bull & Bear Markets and Corrections: 2008–2014* 1,900 1,800 -56.8% -16.0% -19.4% -9.8% -9.9% -7.7% (510) (69) (154) (27) (59) (61) 1,700 1,600 1,50
Slide 3: Although U.S. Stocks Are Hitting All-Time Highs...
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Although U.S. Stocks Are Hitting All-Time Highs... 2000 S&P 500 1800 5/12/14 1600 1,897 1400 1200 1000 800 600 April-2009 April-2010 April-2011 April-2012 April-2013 April-2014 ...There Has Been Substantial Volatility Over the Pas
Slide 4: Active Management Has Been Struggling
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Active Management Has Been Struggling • Only 8% of growth managers beating benchmark year-to-date Year-to-Date Performance 40% 30% 29.1% 25.0% 20% 10% 7.9% 6.6% 4.0% 1.9% 2.5% 2.6% 2.5% 1.1% 0.9% 0% -1.4% -10% Core Growth Value Al
Slide 5: Growth, In Particular, Has Had a Large Turn of Fortune
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Growth, In Particular, Has Had a Large Turn of Fortune Value vs. Growth 1.07 Value/Growth 1.05 1.03 1.01 0.99 0.97 0.95 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 S&P Pure Value Relative S&P Pure Growt
Slide 6: Sector Leadership Year-to-Date
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Sector Leadership Year-to-Date Russell 1000® Growth Year-to-Date Return through May 12, 2014 15.2% 11.3% 5.3% 4.5% 3.8% 3.7% 2.2% 2.1% 2.1% 1.7% -3.2% Utilities Energy Materials Healthcare Consumer Industrials Russell Telecomm Fin
Slide 7: Cyclical Valuation Quite Low versus Defensives
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Cyclical Valuation Quite Low versus Defensives Relative Cyclical Price to Earnings ~ 1 Standard Deviation Below Average Relative Forward P/E Cyclicals versus Defensives 1.8 Cyclicals more expensive 1.6 1.4 1.2 1.0 0.8 Defensives m
Slide 8: Russell 1000 Growth Stock Performance Post-Yellen
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Russell 1000® Growth Stock Performance Post-Yellen* Stock Performance 3/19 – 5/8 versus 2015 Estimated Revenue Growth 80% 70% 60% Energy E&Ps 2015 Estimated Revenue Growth Rate 50% AR 40% 30% COG CXO 20% 10% 0% -10% -20% -30% -50%
Slide 9: Valuation Compression: Biotech versus U.S. Pharmaceuticals
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Valuation Compression: Biotech versus U.S. Pharmaceuticals Celgene Corporation (CELG) versus U.S. Pharmaceuticals Celgene Corporation (CELG) versus U.S. Pharmaceuticals Year-to-Date P/E Last Five Years P/E 27.0 x 30.0 x 25.0 x 25.
Slide 10: Biotech Cheaper than U.S. Pharmaceuticals for First Time in 10 Years
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Biotech Cheaper than U.S. Pharmaceuticals for First Time in 10 Years Biotech P/E to Growth Ratio U.S. Pharmaceuticals P/E to Growth Ratio 2014E 2015E 2016E 2017E 2014E 2015E 2016E 2017E GILD 1.0x 0.8x 0.7x 0.6x PFE 3.3x 3.2x 3.1x
Slide 11: Tech Valuations Near 15-Year Lows
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Tech Valuations Near 15-Year Lows Relative Price/Earnings Relative Price/Cash Flow 2.4 2.1 2.0 2.2 1.9 2.0 1.8 1.7 1.8 1.6 1.6 1.5 1.4 1.4 1.3 1.2 1.2 1.1 1.0 1.0 0.8 0.9 5 8 0 2 4 7 9 1 3 01 04 07 1 14 99 199 00 00 00 200 00 01 0
Slide 12: We Have Maintained Our Exposure to Active Growth
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund We Have Maintained Our Exposure to Active Growth Monthly Risk Index Policy: Growth 0.50 0.40 0.30 0.20 0.10 0.00 -0.10 -0.20 -0.30 -0.40 Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 Contribution (% Retur
Slide 13: Top Weightings in the Russell 1000 Growth Index
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Top 20 Weightings in the Russell 1000® Growth Index Year-to-Date through May 9, 2014 QTD YTD LTG FY2/FY1 Ticker Security Name Weight % Chg % Chg Earnings Revenue Growth Own GOOGL + GOOG Google Inc. 2.9% -5.6% -6.1% 17.7% 17.7% QCO
Slide 14: Equity Valuations Are Still Reasonable
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Equity Valuations Are Still Reasonable S&P 500 Forward P/E Ratio 28 x 26 x 24 x 22 x 20 x 18 x 16 x 14 x 12 x 10 x 98 99 0 1 2 03 4 05 06 7 8 9 11 12 3 4 9 9 200 00 -200 0 00 0 0 00 -200 00 0 0 01 01 n-1 b-1 ar- pr -2 ay n-2 ul- 2
Slide 15: Market P/E Multiple Warranted Given Subdued Inflation Environment
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Market P/E Multiple Warranted Given Subdued Inflation Environment Average S&P Last Twelve Months P/E by YoY CPI Tranche (1950-2014) 17.9x 17.2x 17.2x 16.6x 14.7x 10.9x 9.5x 8.5x 8.3x -2-0% 0-2% 2-4% 4-6% 6-8% 8-10% 10-12% 12-14% C
Slide 16: Weakest Job Growth Recovery in Post-War History
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Weakest Job Growth Recovery in Post-War History Change in U.S. Employment: Recessions (1948-2014) 15 13 11 Percent Change from Start of Recession 9 7 5 3 1 -1 -3 -5 -7 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Months from S
Slide 17: Key Indicators Remain Growth Supportive
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Key Indicators Remain Growth Supportive Federal Funds Rate Barclays U.S. Treasury 12% bps 2Y/10Y Yield Spread 160 140 8% 120 100 4% 80 0% 60 9 84 986 8 9 992 995 997 00 0 03 006 008 11 014 3 3 3 3 13 3 3 4 4 4 4 n-1 t-1 -19 r-1 n-
Slide 18: Q1 Earnings: 76% of Companies Reporting Upside Surprise on Earnings
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Q1 Earnings: 76% of Companies Reporting Upside Surprise on Earnings 53% of Companies 76% of Companies Beating on Top Line Beating on Bottom Line S&P 500 Index: Sector (GICS) Reported Sales Surprise Earnings Surprise All Securities
Slide 19: Q1 Earnings Results: Still Modest Cost Leverage and Margin Expansion
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Q1 Earnings Results: Still Modest Cost Leverage and Margin Expansion S&P 500 Index: Sector (GICS) Reported Sales Growth Earnings Growth All Securities 453/499 2.59% 5.10% Energy 44/44 0.43% -0.29% Materials 30/30 0.87% -2.14% Indu
Slide 20: U.S. Commercial and Industrial Loans Rising at an 22% Annual Rate
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund U.S. Commercial and Industrial Loans Rising at an 22% Annual Rate Last Observed April 16, 2014: $1.7 Trillion, Up 22% 13-Week Annualized Change 25% 20% QE3 QE4 Twist 15% 10% 5% Taper 0% 1 1 1 1 2 2 2 2 3 3 3 3 4 4 01 -201 01 -201
Slide 21: Thesis Review of Representative Holdings
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Thesis Review of Representative Holdings Brandon Bond 1. NOW 2. ATHN 3. ILMN 20 MKTcc3448 5/11/14
Slide 22: Investment Philosophy
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Investment Philosophy Strong long-term performance may be achieved by participating in the growth and success of extraordinary businesses purchased at attractive valuations. Quality Growth Opportunity Valuation 21 MKTcc3448 5/11/1
Slide 23: Summary of TCW Select Equities Fund Holdings
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Summary of TCW Select Equities Fund Holdings As of March 31, 2014 Security % of Portfolio Security % of Portfolio Google Inc. 5.23 Tiffany & Co. 2.62 Salesforce.com, Inc. 5.03 Celgene Corporation 2.60 Amazon.com, Inc. 4.62 Splunk,
Slide 24: TCW Select Equities Fund Performance
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund TCW Select Equities Fund Performance As of March 31, 2014 Annualized Since Inception (%) Quarter 1 Year 3 Year 5 Year 10 Year Inception Date TGCEX (I Share) -0.87 18.85 13.32 20.57 7.29 9.94 7/1/911 TGCNX (N Share) -0.92 18.55 12.
Slide 25: Biographies
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Biographies Portfolio Manager Investment Team Craig C. Blum, CFA Brandon D. Bond, CFA Portfolio Manager Managing Director Group Managing Director Senior Analyst U.S. Equities U.S. Equities Mr. Blum is portfolio manager of the TCW
Slide 26: Biographies
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Biographies Investment Team (cont’d) Brian M. McNamara Robert J. Park, CFA Managing Director Managing Director Analyst and Portfolio Specialist Senior Analyst U.S. Equities U.S. Equities Mr. McNamara joined TCW in 2012 as a Managi
Slide 27: A Word About Risk
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund A Word About Risk The primary risks affecting this Fund are “price volatility” and “equity risk.” • Price volatility refers to the possibility that the value of the Fund’s portfolio will change as the prices of its investments go
Slide 28: Glossary
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Glossary Active Management – A combination of investment strategies employed by a portfolio High Yield Index Spread – Difference in current yields of various classes of high-yield manager with the goal of exploiting market ineffic
Slide 29: Glossary
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Glossary QE – Quantitative Easing is a government monetary policy occasionally used to U.S. Treasuries (U.S. Treasury Securities) – Bills, notes and bonds that are debt increase the money supply by buying government securities or
Slide 30: Index definitions and mutual fund prospectus notice
Unwavering Focus on Growth: An Update on the TCW Select Equities Fund Russell 1000® Growth Index – Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000® Value Index – Measures the performance of the 1,000 largest