Stock Analysis & Valuation Western Asset Global High Income Fund Inc. (EHI)

• Previous Close: $6.43
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	256.21	3885
Intrinsic value (DCF)	8.11	26
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Western Asset Global High Income Fund Inc. (NYSE: EHI) is a closed-end fixed income mutual fund managed by Legg Mason Partners Fund Advisor, LLC, with co-management from Western Asset Management affiliates. The fund specializes in global fixed income investments, targeting undervalued bonds across diversified sectors, including below-investment-grade (high-yield), emerging market, and investment-grade securities. With an average credit quality of BB (S&P) and a duration of 3.8 years, EHI seeks high-income generation while balancing risk through quantitative analysis. The fund benchmarks against key indices like the Barclays U.S. Aggregate and JPMorgan Emerging Markets Bond Index Global. Formerly known as Salomon Brothers Global High Income Fund, EHI has been a player in the income-focused asset management space since 2003. Its strategy appeals to investors seeking diversified global fixed income exposure with a focus on yield enhancement in a low-interest-rate environment.

Investment Summary

Western Asset Global High Income Fund (EHI) offers investors exposure to a diversified portfolio of global fixed income securities, emphasizing high-yield and emerging market debt for enhanced income. The fund’s below-investment-grade focus (average BB rating) and 3.8-year duration suggest moderate credit risk but lower interest rate sensitivity. With a trailing dividend yield of ~9.8% (based on a $0.837/share annual payout), EHI is attractive for income-seeking investors. However, its reliance on high-yield and emerging market debt exposes it to credit and currency risks, particularly in volatile macroeconomic conditions. The fund’s modest beta (0.79) indicates lower volatility relative to equities, but its leveraged position ($87.6M debt vs. $29M cash) could amplify losses during downturns. Performance hinges on Western Asset’s active management and credit selection in a challenging global bond market.

Competitive Analysis

Western Asset Global High Income Fund (EHI) competes in the crowded global high-yield and emerging market debt space, differentiating itself through Western Asset’s deep credit research and multi-sector approach. Its competitive edge lies in the fund manager’s expertise in below-investment-grade and emerging market bonds, backed by Legg Mason’s broader institutional resources. However, EHI faces stiff competition from both passive ETFs (e.g., HYG, EMB) and active peers offering similar strategies. The fund’s closed-end structure provides capital stability but trades at a premium/discount to NAV, adding complexity for investors. Its 3.8-year duration is shorter than many peers, reducing interest rate risk but potentially limiting yield in a steepening curve environment. EHI’s niche is its hybrid focus on both high-yield and emerging markets, though this dual mandate may dilute outperformance in specialized segments. Fee efficiency and leverage management are critical to maintaining competitiveness against lower-cost alternatives.

Major Competitors

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG): HYG is a passive ETF tracking the high-yield corporate bond market, offering lower fees (0.49% expense ratio) and liquidity advantages over EHI. However, it lacks EHI’s active management and emerging market exposure. HYG’s broader diversification reduces idiosyncratic risk but may yield less in selective credit environments.
• iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB): EMB provides pure-play emerging market debt exposure at a lower cost (0.39% expense ratio) than EHI. While EMB is limited to USD-denominated bonds, EHI’s active strategy includes local currency and high-yield selections. EMB’s passive approach lacks EHI’s credit rotation potential but benefits from scale and transparency.
• Nuveen High Income December 2023 Target Term Fund (JHY): JHY is a term-focused high-yield closed-end fund, contrasting with EHI’s perpetual structure. JHY’s defined maturity reduces NAV volatility but sacrifices flexibility. EHI’s global mandate and longer-duration portfolio offer more diversified income streams, though JHY’s term feature appeals to capital preservation-focused investors.
• BlackRock Floating Rate Income Strategies Fund (FRA): FRA focuses on floating-rate loans, mitigating interest rate risk compared to EHI’s fixed-rate emphasis. FRA’s senior-secured bias offers higher recovery rates but lower yields than EHI’s high-yield/EM mix. EHI’s duration management may outperform in stable or declining rate environments.