A-Z Sorting on Document Library Not Working Properly?

We have a document library in SharePoint with various documents grouped into headings like below.

If I click on the group heading where it says 'Template Document', it displays me a list of all the documents in that group.

When I click the column heading to sort by A-Z, the list of documents is displaying incorrectly. You can see in the screenshot below that a document starting with A is showing second in the list.

Does anyone know why this is happening? I checked the view and there are no custom sorting settings currently being applied. I have no idea what's causing this.

Thanks!