Key Manager to Exit HIX Fund Amid Franklin Templeton Reshuffle

NEW YORK, NY – April 17, 2026 – Western Asset High Income Fund II Inc. (NYSE: HIX) announced a planned change to its leadership, with portfolio manager Christopher Kilpatrick set to depart from the fund's management team effective September 30, 2026. While the change affects a key high-yield fund, it appears to be part of a much larger, strategic realignment at parent company Franklin Templeton, which is navigating a wave of nearly 30 portfolio manager departures across its various investment groups.

A Team in Transition

The announcement confirms that Kilpatrick, who is listed as a portfolio manager on several other Western Asset funds, will no longer be involved in the day-to-day oversight of HIX. The fund will continue to be managed by the remaining members of the team: Michael Buchanan, Walter Kilcullen, John Hwang, and Ryan Kohan.

This remaining team represents a deep bench of experience, a factor Western Asset emphasizes through its collaborative, team-based investment approach. This structure is designed to provide continuity and mitigate the risk associated with the departure of any single member.

Leading the overarching strategy is Michael Buchanan, who was appointed Chief Investment Officer of Western Asset in August 2024. With a career in fixed-income spanning since 1990, Buchanan directly oversees the firm’s Global Credit Team. He is joined by Walter Kilcullen, the Head of U.S. High Yield; Ryan Kohan, the Head of Bank Loans; and John Hwang, an expert in credit markets and corporate restructuring. The collective expertise of the team covers the core components of the HIX fund's strategy, from high-yield corporate bonds to leveraged loans and structured credit.

The five-month notice period for Kilpatrick’s departure signals a planned and orderly transition, allowing the remaining team ample time to reallocate responsibilities and ensure a seamless continuation of the fund's management.

The Broader Strategic Context

Kilpatrick’s exit is not an isolated event. It coincides with a broader announcement from Franklin Templeton regarding a voluntary buyout program offered in February 2026. This program has resulted in the planned departure of nearly 30 portfolio managers across seven of the firm's subsidiaries. Four managers from Western Asset are reportedly among those leaving.

This wave of personnel changes is widely seen as part of Franklin Templeton's ongoing efforts to streamline operations and right-size its investment teams following a series of major acquisitions, most notably its 2020 purchase of Legg Mason, the former parent of Western Asset. With over $1.68 trillion in assets under management, Franklin Templeton is a behemoth in the industry, and such strategic realignments are often a consequence of integrating disparate corporate cultures and investment platforms.

For investors, this context is crucial. The change at HIX is less about a single manager’s decision and more about a top-down corporate strategy aimed at reshaping the firm's talent pool for future growth. It highlights the challenges and dynamics of mega-mergers in the asset management space, where firms must balance retaining key talent with achieving operational synergies.

A Closer Look at the HIX Fund

The Western Asset High Income Fund II is a closed-end fund with a distinct risk-and-reward profile that investors will be watching closely through this transition. Its primary objective is to maximize current income, a goal it pursues through an aggressive strategy.

Under normal conditions, HIX invests at least 80% of its assets in high-yield debt, commonly known as "junk bonds." The fund also employs significant leverage—amounting to a ratio of 32.95% as of mid-April—to amplify its returns. This use of borrowed money can magnify both gains and losses, making the fund a higher-risk proposition. Morningstar data reflects this, assigning HIX a Portfolio Risk Score of 49, categorized as "Aggressive."

The fund's performance has been mixed. As of March 31, 2026, it delivered a one-year NAV return of 8.77% and a ten-year average return of 5.71%. However, its five-year average return was a more modest 2.14%. Like many closed-end funds, its shares frequently trade on the New York Stock Exchange at a discount to their net asset value (NAV), which was recently recorded at -4.48%. With total assets of nearly $567 million and a high total expense ratio of 4.00% (which includes interest costs from leverage), the fund’s performance and management are under constant scrutiny.

Navigating a Shifting Fixed-Income Landscape

The changes at Western Asset and Franklin Templeton are occurring against the backdrop of a rapidly evolving fixed-income market. The asset management industry is grappling with a significant trend toward passive investment strategies, with investors increasingly favoring low-cost bond ETFs over actively managed funds.

In response, active managers like Western Asset are under pressure to demonstrate their value, often through deep fundamental research and a team-based approach that can navigate complex credit markets more nimbly than an index. The firm's emphasis on combining top-down macro views with bottom-up security selection is its primary defense against the passive wave.

The departure of a portfolio manager, even as part of a broader restructuring, inevitably raises questions for investors about continuity and future performance. However, the stability provided by a deep, experienced, and well-structured team is the argument firms like Western Asset make to retain investor confidence. The long-term success of HIX will depend on the ability of its remaining managers—Buchanan, Kilcullen, Hwang, and Kohan—to continue executing its high-income strategy effectively within a firm that is itself undergoing significant transformation. As the asset management industry continues to consolidate, the dynamic between parent company strategy and individual fund management will remain a critical factor for investors to monitor.