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Christopher Metcalfe said Newton anticipated problems within the UK economy on a medium-term basis of two to three years as the country rebalanced from mass users of credit to a nation of savers.

While this occurred, he said, the UK would see a "medium-term period of sub-par economic growth".

"If the UK economy deteriorates further, there may be some banks that have to come back for second or third rights raising," he added. "We can't say yet that banks are drawing a line under their positions."

As a result, he has been using net inflows to add to positions in groups such as Royal Dutch Shell, which now accounts for roughly 8.5 per cent of the fund, as is the largest single weighting.

"I don’t think many funds are overweight Shell," said Mr Metcalfe. "We do think the UK oil majors are probably not reflecting the increases we have seen in the oil price. Shell looks pretty well situated for this."

He has also built a 1.2 per cent position in Canadian oil exploration firm Nexen. "This is much smaller, but is still a fairly significant stock," the manager said.

Meanwhile, Metcalfe has taken a 2.5 per cent position in Bayer Corporation, while adding to his holding in German potash producer K&S Group.

"This is the fund's best performing stock so far, and I think it still looks quite cheap," he said. "Fertilisers are an interesting area to be involved in."

For more information, see this week's issue of Investment Adviser (19th May).