TCW’s Jeff Katz on AI, Discipline, and Where Fixed Income Still Creates Opportunity

At Future Proof Citywide in Miami, TCW Managing Director Jeff Katz made a clear case that while technology may be changing the workflow, disciplined investing still drives results. For financial advisors navigating a market defined by higher rates, tighter spreads, evolving client expectations, and new product wrappers, Katz’s perspective offered a practical reminder that fixed income is still very much an active, opportunity-rich arena.

TCW has long been known for its research-driven fixed income expertise, and Katz noted the market’s evolution has not changed the firm’s core strategy. “The process, the philosophy, hasn’t changed a ton,” he said. “We’ve stayed disciplined to our approach.” At the same time, TCW is using new tools to speed research and leaning into areas where it sees better value. For advisors, that combination of innovation and discipline may be exactly what matters most.

AI as an accelerator, not a substitute

Katz said TCW has been implementing Copilot across the firm, but not as a replacement for human judgment. The goal, he said, is to make the process of breaking down data “more readily available and faster” across investment teams. He noted that “what would take maybe two to three hours of breaking down quarter end data or reports can be done in a matter of minutes.”

That distinction matters for advisors. In an industry where AI can sometimes be treated as a buzzword, TCW’s approach is more grounded: use technology to improve efficiency, then rely on experience to interpret what the data means. Katz said that dynamic has been especially useful for credit analysts and securitized analysts, where AI has “certainly streamlined that research process for us.”

For advisors, that is an important takeaway. AI is most useful when it frees up time for deeper thinking, not when it tries to make the investment decision itself. As Katz put, TCW is using AI “as a tool to accelerate our ability to break down data, but not letting it cloud our judgment.”

Why fixed income is back in focus

“We came from a yield starved environment post the GFC,” Katz said, and “the Fed hiking rates 500 basis points in 2022 has really brought a lot of individuals back to the fixed income market because of the yield perspective.” For advisors, that helps explain why fixed income has moved back into focus after years of scarcity.

That shift has also widened the opportunity set. In Katz’s view, “active fixed income management matters,” especially because major benchmarks still leave large parts of the market underrepresented. Pointing to the Bloomberg Aggregate Index, he noted that it is “roughly half Treasuries,” with another 27% in investment-grade credit and 23% in agency mortgages. “There are a lot of parts of the fixed income markets outside of that where we can drive value.”

Staying disciplined in a changing market

A recurring theme in Katz’s comments was consistency. Even in a shifting market, TCW has tried to remain “a value manager” and stay “cycle aware,” rather than chasing whatever part of the market is getting the most attention.

That is often easier said than done. As Katz put it, “there’s always the new shiny toy where there may be higher margins and or more focus.” Over time, he added, “as more money floods into certain parts of the market, they compromise their underwriting principles.” That recognition has helped lead TCW away from some parts of the credit market it views as overvalued and toward areas where it sees better relative value.

For advisors, that discipline matters because it speaks directly to portfolio construction. In a market where spreads are tight and some credit sectors have become crowded, being selective matters more than ever. The point is not to abandon fixed income, but to be more thoughtful about where the best value may be.

The role of securitized assets

Securitized investments came up as one of the areas where Katz still sees compelling value. He said TCW has leaned into “other parts of the market where we’ve found better risk adjusted or better skewed value, namely securitized.” He also noted that many investors have been “overexposed to credit and under exposed to things that have different drivers of performance.”

That diversification angle is important for advisors. Many fixed income portfolios still draw heavily from the same basic sources of return, even when clients may need more variety in how income and risk are balanced. Katz’s point was not just that securitized assets can offer value, but that they may also help broaden fixed income exposure in a more thoughtful way.

As he put it, securitized can serve as a “diversification tool,” whether in “public or private markets.” For advisors, that makes it more than a niche allocation. It is one way to look beyond crowded areas of credit without simply adding more of the same.

The wrapper matters too

TCW is also paying attention to how investors access strategies, not just what strategies they own. Katz pointed to FLXR as an example: a best-ideas income strategy TCW launched in 2018 in a mutual fund wrapper before moving it into an ETF “in recognition of the market’s demand for income.” He noted that the strategy had been successful before the shift, but the change in wrapper helped it reach a broader audience.

That move mattered. The strategy grew from roughly $300 million to $2.8 billion, reflecting both investor demand and the market’s growing preference for more flexible access points. For advisors, that reinforces a practical reality: in today’s market, good ideas still need the right packaging.

The lesson is not that the wrapper drives performance, but that accessibility influences adoption. Advisors are often choosing among many similar income options, and vehicles that align with client demand, liquidity preferences, and portfolio implementation needs can gain traction faster.

Explaining fixed income more clearly

Advisors also spend a lot of time translating fixed income into client language, and Katz said the best approach is to keep it simple. “Don’t overcomplicate,” he said. “At the end of the day, it comes down to understanding the borrower, understanding the collateral, understanding the objective of funding and financing.”

That simplicity is useful for client conversations. Fixed income can become overly technical very quickly, especially when duration, spreads, and securitized structures enter the discussion. Katz’s point was to strip away “a lot of the noise” and get back to the fundamentals that actually drive outcomes.

That is also where advisor communication can become stronger. Clients do not need every detail of the research process, but they do need confidence that their manager understands the borrower, the structure, and the risks involved. TCW’s emphasis on fundamental analysis helps create that confidence.

What advisors should watch next

Looking ahead, Katz emphasized that markets remain cyclical and mean-reverting. “Even when we have technological innovation, they tend to overreact one way or another,” he said. He also pointed to a shift in the identity of the marginal buyer, with more investors focused simply on yield rather than where that yield is coming from.

That distinction could matter a lot if rates begin to fall. Katz said the marginal buyer has “evolve[d] from what I would call a relative value buyer to a yield buyer,” meaning investors may care less about spread versus base rate than they once did. But in an environment where rates come down, he added, “you would see that marginal buyer disappear.”

If that happens, spreads could widen and create a more attractive backdrop for active managers. As Katz put it, “Spreads will widen out, and that’s a really fertile time for us to add things like credit where we’ve been underweight.” For advisors, that is a useful reminder that today’s yield-driven market may not last forever, and that flexibility could matter a lot in the next phase.

Why TCW stands out for advisors

TCW’s appeal for financial advisors is not that it promises to reinvent fixed income. It is that the firm combines scale, research depth, and discipline with a willingness to adapt how it delivers solutions. Katz’s comments suggested a firm that is using AI to work faster, using securitized assets to broaden opportunity, and using ETFs to meet changing client preferences, while still holding tightly to a value-oriented investment process.

For advisors, that is the kind of manager profile that can be useful in an uncertain market: thoughtful, flexible, and grounded in analysis rather than headlines. In a world where too many investment conversations are driven by whatever is new, TCW’s message is refreshingly clear. Process matters, discipline matters, and innovation works best when it supports both.

If you want to learn more about TCW’s investment approach and strategies, visit TCW’s website at TCW.com.