Company: TSI
Filing Date: 2025-03-05
Form Type: N-CSR
Source: 0001193125-25-046168
Chunk: 5

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-03-05
Form: N-CSR
Chunk 5
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) deal structures backed by trophy collateral with strong sponsors, which provided opportunity to capitalize on attractive risk-adjusted yield and spread opportunities down capital structures of these issues with strong fundamentals. Within the ABS allocation, CLOs (collateralized loan obligations) contributed given compressing spreads on strong investor sponsorship, while single family rental collateral further benefitted performance. Non-agencyMBS was also a notable contributor for the year as yield premiums fell across the sector and credit curves flattened, driven by sustained investor demand for yield and spread. Contributions were led by re-securitizedloans backed by legacy collateral legacy (pre-2008vintage) subprime profiles, which contributed healthy coupons to the portfolio while mitigating the effects of interest rates given the floating rate coupons. Agency MBS, however, was a headwind as rate volatility weighed on the sector. Away from securitized sectors, the Fund maintained an allocation to both investment grade and high yield corporate credit. Though the profile of holdings was defensive, focused on non-cyclicals,communications, and large money center banks, the performance impact was positive as corporate credit spreads compressed to multi-year tight levels, providing opportunities to trim into strength and optimize existing holdings. Finally, equity holdings in the Fund contributed overall, led by non-cyclicaland energy holdings. TCW remains committed to our time-tested value-oriented philosophy, with bottom-upportfolio construction and relative value sector allocations the pillars by which we seek to introduce carry and return potential to portfolios. This is reflected in a reduced allocation to corporate credit given tight credit spreads, though with targeted positions in high-conviction issuers and industries like communications and utilities, the latter offering a variety of opportunities to capitalize on the structural tailwind of power generation and demand. Additionally, the Fund maintains a small allocation to non-USDcorporate credit that offer attractive relative value. Meanwhile, securitized products present a more compelling relative value proposition given wider yield spreads, informing a sizable allocation across sectors. Agency MBS represents a large position given favorable liquidity, the government guarantee, and over 50 bps of spread premium versus investment grade credit. Though non-agencyMBS doesn’t carry the government guarantee, the sector is bolstered by robust collateral profiles that help maximize cashflow back to bondholders, with the ongoing evolution of structures and deal types across the sector fertile ground to capture alpha potential at the issue level. Similarly, CMBS exposure is focused on SASB deals that allow for a detailed analysis of the underlying property and sponsor, facilitating bottom-upinclusion