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Helena Morrissey, chief executive of Newton, said: "I'm interested in exploring adding performance fees to the retail division. That's something you should expect to see from Newton in the not too distant future."

She noted 75 per cent of institutional accounts, which make up more than half of Newton's £37bn assets under management, paid performance-related fees.

"We don't separate out the institutional, retail and private client accounts. It's the same group of analysts and managers. The only major difference is the charging structure," she added.

Ms Morrissey said performance-related fees worked best for absolute return products, as the success of BlackRock's £865m UK Absolute Alpha, which takes a cut of above-target returns, had shown.

Newton's Absolute Intreprid fund, which has been run to a mandate of Libor plus 4 per cent since March 2004, has courted comparison with its better known counterpart at BlackRock. Paul Feeney, Newton's head of distribution, said it would "give UK Absolute Alpha a run for its money".

Iain Stewart, manager of Absolute Intrepid and head of Newton's thematic research, has an unconstrained multi-asset mandate, and buys put options for portfolio insurance.

But unlike BlackRock's Mark Lyttleton, Mr Stewart does not short stocks. "What we know we do well is long-only thematic investing," said Ms Morrissey. "We've no proven abilities at shorting. It's a different skill set."

Ms Morrissey also said running short portfolios alongside long-only portfolios damaged relationships with company management, and would create tensions within the Newton team.

The firm therefore has no plans to launch products, such as 130/30 funds, which allow managers to take short positions. "130/30s are a load of old rubbish," said Ms Morrissey."Our view on trendy stuff is to avoid it, because many of these things turn out to be passing fads."