The London Stock Exchange launched the Order Book for Retail Bonds in February 2010 to make trading in bonds easier and more accessible. Evans thinks this has encouraged many investors into bonds that are trading at unsustainable prices, and says the same boom mentality that preceded the financial crisis can be seen in the market for these instruments.
"I’m really not sure of the quality of some of the bonds coming out now. Whenever there’s a boom, people lower their risk barriers," he said.
"Look at 2000 – investors sold all their utilities and dived into something dotcom, and we all know how that ended. I think this is happening again. This is the first time that they have opened up the bond market, which seems dangerous to me."
"People have got used to seeing markets going up now, but you need to always be asking yourself if there is a safe exit and will it be repaid?"
"A couple of property ones that I have seen – how will they be repaid in the future?" he asked.
"It’s not clear with some of the bonds I have seen. It seems like a way of getting certain large investors off the hook."
Evans’ IM Matterley Regular High Income fund is the best performer in the IMA Mixed Investment 0%-35% Shares sector over five years, and also has the highest yield, at 4.05 per cent.
Performance of fund over 5yrs
Source: FE Analytics
Data from FE Analytics shows that IM Matterley Regular High Income has made 38.64 per cent over this time.
It has done this with an annualised volatility of 4.54 per cent – also the best figure for the sector.
Evans says that one of the major reasons for his outperformance was his correct decision to sell out of financials before 2008.
"If you look at 2008, the market takes a big dip down and we do not go down too far, because we had decided to cut our exposure to banks."
"We had about 10 per cent in financials in fixed interest and equity and we took it down to 1 per cent."
The fund lost just 3.14 per cent in that calendar year, compared with a sector average of 10.7 per cent, according to data from FE Analytics, although it underperformed in the recovery that followed.
"We lagged because we didn’t like banks as a recovery play," Evans explained.
The manager adds that although he holds gilts in the fund, he uses them as cash reserves, putting new money into the instruments to earn interest while he waits for the correct stock to come along – which he admits is rarely.
He says he is sticking to his cautious approach, whatever the market is doing, and that 45 years of experience in private client wealth management keeps his feet on the ground.
"Every so often I ask myself if I went to every new issue and traded it aggressively would I be better off than buying selectively and holding? But I get half-way through the calculation and my brain steams up and I stop thinking."
The manager has the ability to hold funds in his portfolio and has been happy to do so, albeit with the same buy-and-hold, low-turnover approach.
He has held FE Alpha Manager Neil Woodford’s £998m Edinburgh Investments trust for many years.
"I am getting a bit nervous because of the size and it having too big positions," he continued. "Plus his top-five holdings are my top-five so I ask why I should hold it, but it has done well for quite some time."
Woodford’s trust has beaten its sector average and the performance of the manager’s IMA UK Equity Income funds substantially over three years. It is currently yielding 4.1 per cent, according to the AIC.
Performance of funds vs sector over 3yrs
Source: FE Analytics
Evans also likes Dunedin Income & Growth, which he has held since March 2011.
"It writes simple options, if I can put it that way, so it’s not out of hand. It pays a quarterly dividend too, which I like to have while I’m waiting for the biannual or annual payments on my other holdings."
Dunedin Income & Growth is managed by Jeremy Whitley for Aberdeen Asset Managers and is currently yielding 4.3 per cent.
A more subtle play is Midas Income & Growth.
"I don’t like Midas in its current form, but it’s coming up for expiration and they will be wanting people to vote for an extension and I don’t think they will get it," Evans added.
"This means they will sell off the assets so I will get some of that back."
"I also have BlackRock Commodities Income, which I bought at a 5 per cent net dividend yield."
The trust is currently yielding 4.6 per cent, although it is sitting on a 3.1 per cent premium, making it expensive.