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Patrick Armstrong, co-head of the multi-asset group at Insight, said he and fellow co-head Ana Cukic had starting shorting the Russell 2000 in November and going long on the S&P 500 across their £103.1m Diversified Dynamic Return, £243.3m Diversified Target Return and £87m Wealthbuilder Balanced funds.

But as their bet has not yet pulled off the expected result, the managers increased their positions in the face of waning US consumer demand, which supports the bulk of the country's GDP. "The biggest economy in the world is a one-trick pony, and that pony has lost a leg," Mr Armstrong said.

He pointed out the US mid-cap Russell 2000 index was worth twice as much as the S&P 500 on a cashflow basis, despite the recent flight to high-quality multinationals.

"Analysts are over-confident. People are expecting unrealistic earnings growth – 20 per cent from small caps and 10 from large caps." He observed a neutral year on a historical basis would see earnings growth of just 6 per cent. "But we are in a different scenario than a neutral environment."

He believed the sector should be on a discount and preferred larger companies with more diversified earnings overseas. "Foreign economies are expecting growth, and the US is expecting recession."

In March, Mr Armstrong and Ms Cukic also used a structured note to bet the S&P 500 would not fall more than 50 per cent and the Russell 2000 would not go up more than 30 per cent over the subsequent year. If both wagers come true, they will collect an 18 per cent coupon. If not, the managers pay out proportionately to the rise or decline of the indices.