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Patrick Harrington, who has outperformed the FTSE All-Share index and the peer group in his previous role as a UK equity fund manager, said he would look for businesses that could "generate decent returns on capital over time", rather than grow their revenues.

He took the example of British Airways, whose share price had risen less than its revenue growth would suggest since it was first listed.

He said: "British Airways is in an industry that's seen fast long-term growth, but the financial characteristics of the industry are diabolical. Fuel prices are all over the place. That's the type of industry I don't invest in."

The water industry, by contrast, exhibited "no growth whatsoever, but is allowed to earn a decent return on assets".

Given Mr Harrington's previous experience as an equity income manager, he looks carefully at cash flow, but he said a company's dividend yield was "neither here nor there" when he came to making an investment.

In terms of sector weighting, the manager has already substantially reduced the financials component of the portfolio, entirely selling holdings in Lloyds Banking Group and RBS.

"Banking as an industry won't be the same," he said. "You've got much lower leverage, and banks are going to have to hold much more in the way of liquid securities."

He also warned there was a "very possible danger" of debt-to-equity swaps in bailed-out institutions, whereby debt holders' interest payments would be cancelled and existing shareholders diluted.