Why TCW Durable Growth ETF Lagged the S&P 500 in Q1

TCW Durable Growth ETF (GRW) trailed the S&P 500 in the first quarter of 2026, the fund's managers said in a quarterly commentary, after a surge in energy prices and geopolitical volatility punished growth-heavy portfolios.

The rotation out of growth stocks accelerated as oil prices climbed and conflict escalated in Eastern Europe and the Middle East. Energy and defense sectors rallied, lifting the broad market, while long-duration stocks sold off. The fund's tilt toward technology, consumer discretionary, and other growth names left it exposed to those shifts, the managers wrote.

Rising bond yields added pressure. The 10-year Treasury yield pushed higher on inflation fears tied to energy supply disruptions. Higher discount rates hit valuations hardest for companies with distant profits – the kind of durable-growth names GRW targets.

Similar patterns emerged in other growth-oriented funds. The Harbor Tech ETF (GHAR) also trailed its benchmark in Q1, trimming its Nvidia stake to reduce concentration risk.

The TCW fund's managers said their focus on companies with pricing power and recurring revenue streams remains unchanged. They did not specify exact positioning changes but noted the portfolio is built to withstand macro shocks over a full cycle.

GRW ended the quarter underperforming the S&P 500 by a wide margin, the commentary said. The fund's net asset value per share fell – the exact loss was not disclosed – while the index remained positive, boosted by energy and value names.

For investors, the quarter underscored a classic growth-at-risk environment. When supply shocks dominate, growth funds typically lag until central banks stabilize inflation expectations. The managers struck a patient tone, arguing that the underlying companies' earnings power will reassert itself once energy markets settle.