This week we sit down with Jennifer Grancio at TCW to discuss the company’s recent launches and their views on the active ETF market.

What led to TCW’s decision to enter the ETF space?

For more than 50 years, investors have trusted TCW to provide active strategies across fixed income, equities, emerging markets, and alternative investments. As demand for ETFs increases, we are committed to innovating and delivering solutions to meet our clients’ needs. Our platform of eleven equity and fixed income ETFs capitalizes on TCW’s legacy of strong performance and investment expertise.

Just last month you launched and converted 5 new actively managed fixed income ETFs. Can you tell us more about this lineup?

These new conversions and launches bring our fixed income ETF platform to six products, joining TCW Flexible Income ETF (FLXR) which converted earlier in June.

This expansion provides investors with a broader range of TCW’s precision ETFs to capitalize on attractive alpha opportunities while actively mitigating downside risk. These ETFs belong alongside your existing core and seek to maximize income, enhance total return, and diversify your portfolio.

Our lineup now includes two multi-sector ETFs, FLXR which is focused primarily on investment grade sectors and TCW Multisector Credit Income ETF (MUSE) which focuses on plus sectors (high yield, senior loans, and emerging markets). Both have the flexibility to dynamically shift allocations based on changing market conditions and relative value.

In addition, we have four single sector ETFs focused on AAA CLOs (ACLO), senior loans (SLNZ), high yield bonds (HYBX) and investment grade corporate bonds (IGCB). While index ETFs can be helpful for liquidity, we believe investors also need active ETFs which seek to deliver better long-term risk-adjusted alpha working from a much broader set of securities than index products.

TCW also has a suite of five equity ETFs. What are some key themes you find compelling in the equity market?

Our active equity ETFs are high conviction concentrated portfolios focused on capturing the value presented by long-term thematic opportunities. We have identified massive economic shifts and the companies across sectors that we believe are most likely to benefit from them. We believe most equity investors are under-exposed to the leaders of these transformative megatrends including supply chain reshoring, the energy transition and artificial intelligence.

Starting with supply chain reshoring – global supply chains are transitioning as the pre-pandemic model of manufacturing goods abroad shifts to a model where goods are manufactured in North America. This shift is already happening – since the beginning of 2021, $1.2T in megaprojects has been announced in the U.S. and only 18% has broken ground, creating an enormous opportunity that the TCW Transform Supply Chain ETF (SUPP) seeks to capture.

Another massive transformation we have identified is the energy transition. The planet’s energy and power systems – and the businesses that are the greatest consumers of energy – are undergoing dramatic change. Global investment in the energy transition hit a record $1.8 trillion in 2023, with more than $5T in annual spending needed each year until 2030. These investments are required in infrastructure, materials, and “old economy” companies which is the focus of our ETF, TCW Transform Systems ETF (NETZ).

You have heard about the third mega-theme: Artificial Intelligence. Our strategy is about the entire infrastructure and growth in value over time – not just a few high-fliers. As pioneers in the space, incepting TCW Artificial Intelligence ETF (AIFD) in 2017, we believe we are only at the beginning of the transformation to build out AI infrastructure and capability. We focus on providing access to the companies providing foundational technology, those building systems and functionality, and those using AI to disrupt industries.

What are the benefits of active management in the ETF wrapper?

We believe skilled active managers are better positioned to navigate uncertain market cycles like the one we are seeing today and deliver alpha. Active managers can make proactive portfolio construction decisions – resulting in better risk management and potential to deliver alpha.

Within equities, we believe the current macro landscape is creating an ideal stock-picking environment for two reasons:

At TCW we believe active management isn’t just advantageous – it is essential.

Lastly, you’ve recently consolidated your lineup onto the NYSE Floor. What do you see as the benefits to investors of listing ETFs on the NYSE Floor, and more specifically, the benefits to listing active ETFs on the NYSE Floor?

At TCW we’re committed to strengthening the execution experience for our clients and investors when trading in shares of each of the ETFs. By listing on the NYSE, the ETFs have access to best-in-class trading technology and human oversight. Additionally, listing on the NYSE floor has the potential to enhance the ETFs’ market quality as marked by tighter spreads, larger quoted size trades and additional liquidity.

Before investing you should carefully consider the fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus, a copy of which may be obtained from etf.tcw.com. Please read the prospectus carefully before you invest.

TCW Fixed Income ETFs are subject to the following risks: 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.

TCW Equity ETFs are subject to the following risks: Supply Chain Risks. Companies supply chains are generally subject to risk such as legislative or regulatory changes; adverse market conditions and/or increased competition; technological developments and changing technology; cyberattacks that may compromise a company’s operations or business; occasional sharp price movements which may result from changes in the economy, fuel prices, labor agreements, exchange rate movements, and insurance costs; pandemics, natural disasters or other crisis; boarder and/or import controls; pent-up /increased demand; mobility restrictions; shortages of product and labor; dependence on intellectual property rights, and potential loss or impairment of those rights; research and development costs; and rapid product obsolescence. Global, regional, or local events, such as changes to trade relations, trade restrictions, and/or military conflict, may materially disrupt or indefinitely impair the operations of these companies.

Artificial Intelligence Risks: Artificial intelligence-related businesses may be negatively impacted because of, among other things, limited product lines, markets, financial resources and/or personnel these companies may have, intense competition and potentially rapid product obsolescence these companies may face, loss or impairment of intellectual property rights, and the inability to successfully develop products or services even after spending significant amount of resources. Undervalued stocks may not realize their perceived value for extended periods of time or may never realize their perceived value.

Emerging Markets Risk Investments in securities and instruments traded in developing or emerging markets, or that provide exposure to such securities or markets, can involve additional risks relating to political, economic, or regulatory conditions not associated with investments in U.S. securities and instruments.

Alpha is defined as a measure of active return on investment in excess of benchmark index.

The Fund is advised by TCW Investment Management Company LLC. Distributed by Foreside Financial Services, LLC. Effective October 13, 2023, TCW acquired the Transform ETF business from Engine No. 1 and the fund's adviser became TCW Investment Management Company LLC. Prior to that date, the fund's adviser was Fund Management at Engine No. 1 LLC.

NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

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