Innovative investment solution marks the first ESG securitized fund in the U.S. market, establishing TCW’s leadership in ESG
LOS ANGELES–(BUSINESS WIRE)–The TCW Group, a global asset management firm, announced today the launch of the MetWest ESG Securitized Fund (Ticker: MWESX/MWERX), its first ESG-labeled bond fund in the U.S. The product is a milestone for the domestic market at-large as it marks the first of its kind dedicated ESG securitized fund in the U.S., showcasing TCW’s leadership in ESG investing, the securitized market and the development of unique investment solutions.
The MetWest ESG Securitized Fund seeks to maximize current income and achieve above average total return while strategically investing across structured products that include mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities, while opportunistically selecting securities with positive ESG factors based on TCW’s proprietary research and screening. This flexible strategy leverages a well-diversified and broad opportunity set with access to multiple sources of return in seeking to achieve its performance goals and also support environmental and/or social initiatives.
“This fund signals our commitment to deliver innovative ESG solutions in fixed income,” said Steve Kane, Portfolio Manager for the Fund. “We’ve seen the ESG fund landscape grow significantly over the past few years, with increasing product development in the fixed income space particularly recently. We feel confident that we are well-positioned to lead the market and meet increasing client demand for ESG solutions in their securitized allocations.”
TCW brings this fund to market shortly after appointing Olivia Albrecht as Global Head of ESG. Having assumed the role on September 7, 2021, Ms. Albrecht is responsible for leading TCW’s ESG efforts, including ESG integration across the firm’s investment platform and business strategy.
“We’re proud to offer investors a dedicated ESG securitized fund, providing a critical opportunity to be part of the environmental and social solutions to support climate risk mitigation, affordable housing and more equitable lending. By focusing on investments that meet TCW’s ESG criteria in the structured product market, investors can help build a more sustainable economy, support equitable capital market functioning and ultimately impact community development,” said Albrecht.
The MetWest ESG Securitized Fund management team includes Stephen Kane, Generalist Portfolio Manager for TCW’s Fixed Income Group; Mitch Flack, Head of Agency MBS; Harrison Choi, Head of Securitized Trading; and Elizabeth Crawford, Head of Securitized Research. TCW’s Fixed Income Group oversees $225 billion in fixed income assets including the nearly $90 billion MetWest Total Return Bond Fund, one of the largest actively managed bond funds in the world.
About The TCW Group
TCW is a leading global asset management firm with a broad range of products across fixed income, equities, emerging markets and alternative investments. With half a century of investment experience, TCW today manages approximately $266 billion in client assets. Through the MetWest Funds and TCW Funds families, TCW manages one of the largest mutual fund complexes in the U.S. TCW’s clients include many of the world’s largest corporate and public pension plans, financial institutions, endowments and foundations, as well as financial advisors and high net worth individuals. For more information, please visit www.tcw.com.
This material is for general information purposes only. There can be no assurance that the objectives and/or trends will come to pass or be maintained. This material may include estimates, projections and other “forward-looking” statements. Actual events may differ substantially from those presented. TCW assumes no duty to update any such statements. Projections are based on current asset prices and are subject to change. All information is as of the date of this presentation unless otherwise indicated. The processes described herein are illustrative only and subject to adaptation in any particular context. This material reflects the current opinions of the author but not necessarily those of TCW and such opinions are subject to change without notice. TCW, its officers, directors, employees or clients may have positions in securities or investments mentioned in this publication, which positions may change at any time, without notice.
A new fund’s performance may not represent how the fund is expected to or may perform in the long term. In addition, new funds have limited operating histories for investors to evaluate and new funds may not attract sufficient assets to achieve investment and trading efficiencies.
The Fund’s ESG investment strategy may select or exclude securities of certain issuers for non-financial reasons, and there is a risk that the Fund’s performance will differ from funds that do not utilize an ESG investing strategy. ESG investing is qualitative and subjective by nature, and there is no guarantee that the criteria used by, or any judgement exercised by, the adviser will reflect the opinions of any particular investor. In evaluating an issuer, the Adviser is dependent upon information and data obtained through voluntary or third-party reporting that may be incomplete, inaccurate, or unavailable, or present conflicting information and data with respect to an issuer, which in each case could cause the Adviser to incorrectly assess an issuer’s business exposure with respect to excluded activities and/or avoided practices. Successful application of the Fund’s ESG investing strategy and the Adviser’s engagement efforts will depend on the Adviser’s skill in properly identifying and analyzing material ESG issues, and there can be no assurance that the strategy or techniques employed will be successful. Funds with ESG investment strategies are generally suited for long-term rather than short-term investors.
It is important to note that the Fund is not guaranteed by the U.S. Government. Fixed income investments entail interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. Funds investing in bonds can lose their value as interest rates rise and an investor can lose principal.
Mortgage-backed and other asset-backed securities often involve risks that are different from or more acute than risks associated with other types of debt instruments. MBS related to floating rate loans may exhibit greater price volatility than a fixed rate obligation of similar credit quality. With respect to non-agency MBS, there are no direct or indirect government or agency guarantees of payments in pools created by non-governmental issuers. Non-agency MBS are also not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgagerelated securities that have a government or government-sponsored entity guarantee.
Asset-backed securities involve the risk of loss as a result of impairment of the value of the underlying financial assets, prepayment risk and extension risk. Issuers of asset-backed securities may have limited ability to enforce the security interest in the underlying assets, and credit enhancements provided to support the ABS, if any, may be inadequate to protect investors in the event of default.
Asset-Backed Securities – A financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities.
Commercial Mortgage-Backed Securities (CMBS) – A type of mortgage-backed security that is secured by mortgages on commercial properties, instead of residential real estate. A CMBS can provide liquidity to real estate investors and commercial lenders.
ESG – Environmental, Social, and Corporate Governance factors can be used to evaluate diverse investments, including equities, corporate credit, sovereign, securitized and others, to determine how far advanced issuers are or how securities are aligned to sustainability commitments. Once enough data has been acquired along these metrics, ESG factors can be integrated into the portfolio construction process when determining what securities to buy or sell.
Leverage – The use of borrowed money to increase investing power. A firm with significantly more debt than equity is considered to be highly leveraged.
Mortgage-Backed Security (MBS) – A type of asset-backed security (an ‘instrument’) which is secured by a mortgage or collection of mortgages.
Securitized Product – Any fixed income investment from the mortgage-backed, asset-backed, or commercial mortgage-backed sectors.
Structured Securities – Securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows.
You should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. A Fund’s Prospectus and Summary Prospectus contain this and other information about the Fund. To receive a Prospectus, please call 800-241-4671 or you may download the Prospectus from the Fund’s website at TCW.com. Please read it carefully.
MetWest Funds are distributed by TCW Funds Distributors LLC. The MetWest Funds are advised by Metropolitan West Asset Management, LLC, which is a wholly-owned subsidiary of The TCW Group, Inc.
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