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Ruth Keattch, a former star manager at Deutsche Asset Management, has returned to the industry to pick small and mid caps for Artemis Fund Managers.

Ms Keattch joined the boutique last Wednesday to work alongside Derek Stuart on one of Artemis's flagship products, the £848.8m UK Special Situations fund.

According to Artemis, her arrival is not a challenge to Mr Stuart, who has been regarded as a success during his management of the fund.

Indeed, over the past five years the Artemis UK Special Situations fund has consistently outperformed the UK All Companies sector, Morningstar data revealed. According to Trustnet, Mr Stuart has run the fund since March 2000.

Instead, Artemis said it had deliberately timed the appointment to coincide with the fund's return to its traditional hunting ground of small and medium-sized companies. The manager will look to move it in this direction in anticipation of an improving economic and market environment over the next 12-18 months.

Ms Keattch has 20 years' experience in the financial services industry and built her reputation as "Rock Hard Ruth" in the early part of this decade, when she took on private equity firms trying to snap up publicly listed companies on the cheap.

While at Deutsche five years ago, she controlled 7.2 per cent of Fitness First and refused to sell the stake to a private equity firm.

Instead she raised Deutsche's shareholding to more than 10 per cent to frustrate the private equity outfit’s attempts to take total control of the gym chain.

When Deutsche then sold it on to a rival company, she was able to deliver a decent profit on the holding.

She was also involved in a similar battle for upmarket store group Harvey Nichols, which further strengthened her reputation.

Ms Keattch quit Deutsche when rival investment house Aberdeen Asset Management took over her division.

She subsequently joined Troy, the group that looks after the fortune left by the late Lord Weinstock, the former managing director of GEC. At Troy she was a director and head of research and, until May this year, ran the Trojan Capital fund.

Ben Yearsley, investment manager at Hargreaves Lansdown welcomed the appointment. "Artemis has been doing this on many of their funds, appointing additional managers," he said. "Ms Keattch’s appointment is a natural extension of that. Frankly, I don’t see how having additional resources can be seen as a negative."