Investments  

Sanlam bond boss targets £10bn Aum

Sanlam bond boss targets £10bn Aum

The newly appointed head of fixed interest at wealth management firm Sanlam plans to grow the company's bond funds to £10bn in size within a decade.

Peter Doherty joined Sanlam in April from Tideway, bringing three funds and three colleagues with him.

Those funds, now called Sanlam GBP Hybrid Capital Bond fund, Sanlam GBP Credit fund, and Sanlam High Income Real Return fund, are worth a total of £200m.

Mr Doherty said it was hard to build adviser interest in the products at Tideway which is a small wealth management firm but Sanlam was a different story.

He said: “I hope Sanlam is the last place I work. I am 53 now, and I hope that over the next decade we can grow to £10bn.”

He said the largest clients of the funds would be Sanlam's life arm Sanlam Investments and Pensions and business coming from Sanlam's advisers.

Sanlam has a model portfolio service, where a central committee defines the asset allocation and funds are then selected from both internal and external providers. 

But Sanlam funds are also available to external advisers.

Mr Doherty said: “The life company guys and the internal guys will keep me and the team on our toes. If we need to improve, they will tell us. The funds we have have income as a priority, all of the companies we own are paying their coupons.”

Mr Doherty previously worked at Goldman Sachs, Bank of America and Bear Stearns.

He said his aim was to apply the technical knowledge he gained at those firms to portfolios run for retail clients who cannot typically access strategies run by investment banks.

Mr Doherty said: “Many funds out there now are saying they are run on a total return basis, because they cannot generate income, but we recognise the importance of income, and are happy to go down the capital structure to get it.”

For a bond investor, going down the capital structure means buying the second tier of bonds issued by a company, known as subordinated bonds.

By doing this, a client is effectively second in the queue to be paid, but gets a higher income payment as compensation. 

Income investors have been hit hard by the prevailing coronavirus crisis.

They are facing at least £30bn in dividend short-falls this year as companies including banks and insurers scrapped payouts to shareholders amid the crisis.

This morning the Treasury announced companies borrowing more than £50m through its Coronavirus Large Business Interruption Loan Scheme, will be subject to an outright ban on dividend payments.

The regulators have already warned firms to prioritise their own stability over making payments.

david.thorpe@ft.com