VLT - HIX: Global Exposure Is Nice But Underperformance And NAV Destruction Suggests Caution

2024-05-07 17:01:47 ET

Summary

• Western Asset High Income Fund II has a current yield of 13.27%, outperforming its peers in terms of yield.
• The HIX closed-end fund's share price has declined by 34.90% over the past three years, underperforming the Bloomberg High Yield Very Liquid Index.
• The fund has consistently paid out a larger distribution than the junk bond index, which may be appealing to income-focused investors.
• The fund has reasonable international exposure, which is rather nice to see given the current dynamics playing out in the bond market.
• The fund has a history of paying out distributions exceeding its income, destroying its net asset value. It also has underperformed its peers despite its higher yield.

The Western Asset High Income Fund II ( HIX ) is a closed-end fund, or CEF, that can be employed by investors who are seeking to earn a very high level of income from the assets that they have accumulated over their lifetimes. On the surface, the fund does very well at the provision of income, as its 13.27% current yield is substantially above that of most of its peers:

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