Global high income fund inc. – fund commentary and portfolio
statistics
New york--(business wire)--global high income fund inc. (the "fund") (nyse: ghi) is a non-diversified, closed-end management investment company seeking high current income and, secondarily, capital appreciation through investments primarily in securities of emerging markets debt issuers. fund commentary for the second quarter of 2015 from ubs global asset management (americas) inc. (“ubs global am”), the fund’s investment advisor market review after a strong start in april, the emerging markets debt asset class gave back its gains as the second quarter progressed. the asset class was initially supported by stabilizing and then rising oil prices. however, a number of factors then triggered a turnaround in may and june. these included rising us treasury yields, concerns over china's economy and a number of geopolitical issues, not the least of which was the escalating crisis in greece. against this backdrop, investor risk aversion increased, especially late in the quarter. all told, the j.p. morgan emerging markets bond index global (embi global) declined 0.29% during the quarter.1 local currency emerging markets debt, as measured by the j.p. morgan government bond index-emerging markets global diversified (gbi-em global diversified), declined 0.96% during the quarter.2 performance review for the second quarter of 2015, the fund posted a net asset value total return of 0.14% and a market price total return of -0.99%. on a net asset value basis, the fund outperformed its benchmark, the global high income fund index (the “index”), which returned -0.62% for the quarter.3 the fund's overweights to venezuelan, nigerian, mongolian and russian dollar-denominated debt, as well as russian quasi-sovereigns, enhanced the fund's results during the second quarter.4 brazilian quasi-sovereigns also contributed to the fund's performance. elsewhere, underweights to local turkish and polish debt were additive for the fund's results. on the downside, an underweight to ukraine was modestly negative for performance. investor sentiment for ukraine improved, given ongoing negotiations in its conflict with russia. however, we maintain our underweight as the country's economic backdrop remains extremely weak, which increases the likelihood of a more difficult debt restructuring. also negatively impacting the fund's performance were its allocations to local peruvian and local indian debt. several changes were made to the portfolio during the quarter. we reduced the fund's duration underweight, although we remain short of the duration of the index. the fund's us dollar-denominated debt exposure was modestly reduced. finally, we sold some of our mongolian and sri lankan positions to capture profits. outlook we have a cautious, but somewhat improving medium-term outlook for the emerging markets asset class. growth in many developing countries is showing signs of strengthening. this, coupled with generally weaker local currencies, could have a positive impact for emerging market exporters. finally, inflation is relatively benign overall and, as such, we do not expect to see policy tightening from emerging market central banks in the near term. while certain geopolitical issues have been priced into the market, in our view, we expect to see continued periods of elevated volatility. within the asset class, we feel us dollar-denominated debt should outperform local debt for the year as a whole. portfolio statistics as of june 30, 20155 top ten countries (bond holdings only)6 percentage of net assets 1 the j.p. morgan emerging markets bond index global (embi global) is an unmanaged index which is designed to track total returns for us dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: brady bonds, loans and eurobonds. investors should note that indices do not reflect the deduction of fees and expenses.2 the j.p. morgan government bond index–emerging markets global diversified (gbi–em) is an unmanaged index which is designed to track the total returns for local currency debt instruments issued by emerging market governments. investors should note that indices do not reflect the deduction of fees and expenses.3 global high income fund index is an unmanaged index compiled by the advisor, currently constructed as follows: 50% jp morgan emerging markets bond index (embi global) and 50% jp morgan government bond index-emerging markets global diversified (gbi-em global diversified). investors should note that indices do not reflect the deduction of fees and expenses.4 quasi-sovereign bonds are securities issued by entities supported by the local government.5 the fund’s portfolio is actively managed, and its portfolio composition will vary over time.6 excludes exposures obtained via derivatives (e.g., swaps).7 forward foreign currency contracts are reflected at unrealized appreciation/depreciation; this may not align with the risk exposure described in the portfolio commentary section which reflects forward foreign currency contracts based on contract notional amount. as of the most recent period end, june 30, 2015, the fund maintained a risk exposure to non-us dollar currencies equal to approximately 51% of the fund.8 credit quality ratings shown in the table are based on those assigned by standard & poor’s financial services llc, a part of mcgraw-hill financial, (“s&p”), to individual portfolio holdings. s&p is an independent ratings agency. rating reflected represents s&p individual debt issue credit rating. while s&p may provide a credit rating for a bond issuer (e.g., a specific company or country); certain issues, such as some sovereign debt, may not be covered or rated and therefore are reflected as non-rated for the purposes of this table. credit ratings range from aaa, being the highest, to d, being the lowest, based on s&p’s measures; ratings of bbb or higher are considered to be investment grade quality. unrated securities do not necessarily indicate low quality. further information regarding s&p’s rating methodology may be found on its website at www.standardandpoors.com. please note that any references to credit quality made in the commentary preceding the table may reflect ratings based on multiple providers (not just s&p) and thus may not align with the data represented in this table.9 net asset value (nav) and market price will fluctuate.10 duration is a measure of price sensitivity of a fixed income investment or portfolio (expressed as % change in price) to a one percentage point (i.e., 100 basis points) change in interest rates, accounting for optionality in bonds such as prepayment risk and call/put features. any performance information reflects the deduction of the fund’s fees and expenses, as indicated in its shareholder reports, such as investment advisory and administration fees, custody fees, exchange listing fees, etc. it does not reflect any transaction charges that a shareholder may incur when (s)he buys or sells shares (e.g., a shareholder’s brokerage commissions). disclaimers regarding fund commentary - the fund commentary is intended to assist shareholders in understanding how the fund performed during the period noted. the views and opinions were current as of the date of this press release. they are not guarantees of performance or investment results and should not be taken as investment advice. investment decisions reflect a variety of factors, and the fund and ubs global am reserve the right to change views about individual securities, sectors and markets at any time. as a result, the views expressed should not be relied upon as a forecast of the fund’s future investment intent. past performance does not predict future performance. the return and value of an investment will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. any fund net asset value ("nav") returns cited in a fund commentary assume, for illustration only, that dividends and other distributions, if any, were reinvested at the nav on the payable dates. any fund market price returns cited in a fund commentary assume that all dividends and other distributions, if any, were reinvested at prices obtained under the fund's dividend reinvestment plan. returns for periods of less than one year have not been annualized. returns do not reflect the deduction of taxes that a shareholder would pay on fund dividends and other distributions, if any, or on the sale of fund shares. investing in the fund entails specific risks, such as interest rate risk and the risks associated with investing in the securities of issuers in emerging market countries. the value of the fund's investments in foreign securities may fall due to adverse political, social and economic developments abroad and due to decreases in foreign currency values relative to the us dollar. investments in emerging market issuers may decline in value because of unfavorable government actions, greater risks of political instability or the absence of accurate information about emerging market issuers. further detailed information regarding the fund, including a discussion of principal objectives, principal investment strategies and principal risks, may be found in the fund overview located at http://www.ubs.com/closedendfundsinfo. you may also request copies of the fund overview by calling the closed-end funds desk at 888-793 8637. ©ubs 2015. all rights reserved. the key symbol and ubs are among the registered and unregistered trademarks of ubs.
