Mr Doherty joined the Sanlam Investments (the asset management arm of the business) in April 2020 when it bought his previous firm Tideway's bond business.
He now runs the £160m Sanlam Hybrid Capital Bond fund. Mr Doherty said: “The link-up with Sanlam has worked very well in terms of growing the fund, and I think we will go above £200m soon. The expectation is that the fund can achieve a 5 per cent income yield this year.”
He acknowledged that with government bond yields at particularly low levels, this was not as easy to achieve, but he believes the opportunity in the bond markets right now comes from investing in the subordinated debt of banks and insurers.
A subordinated bond means the owner of the bond agrees to be paid only after the owners of the higher ranking bond, called the senior bond holders, have been paid.
In exchange for taking this extra level of risk, the investor in the subordinated debt receives a higher interest payment.
Mr Doherty said: “The key difference between the financial companies such as banks and insurers and many other companies who are issuing high yield bonds right now is that the banks and insurers have had to stop paying dividends, they have the extra cash.
"And the nature of these things is that regulators tend to fight the last war, so they have watched the financial sector very closely over the past decade, and ensured they have capital.
"Companies in other sectors are issuing bonds right now because they can’t raise new equity, they can’t sell the shares. That’s not the case with the financials, yet they are all being viewed the same way by the market.”
Mr Doherty’s fund has returned 28 per cent in the four years since launch, ranking it the second best performer in all funds in the IA Strategic bond sector in the same time period.