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Tom Caddick said active managers were still able to produce good relative performance in US small and mid caps despite the recent turmoil.

"There are a few funds, some closed to new investment, that have shown a low correlation to market movements," he observed.

Fund of fund houses such as Thames River Multi-Capital see the North American smaller companies universe as sufficiently large and diverse to provide opportunities for stock pickers regardless of wider conditions.

The IMA North American Smaller Companies sector has outperformed the North America sector over one year to May 11, with losses of 9.4 per cent compared with losses of 15.2 per cent.

Mr Caddick has, therefore, invested in the Schroder US Small and Mid Cap fund, which lost just 5.3 per cent over one year.

The fund is run by Jenny Jones, whose Schroder US Smaller Companies fund also fell by just 8.1 per cent for the period.

Mr Caddick has put the fund in his Balanced Managed and Stockmarket vehicles, but not in his Diversified Income fund. It also features in portfolios 4-7 of his risk-rated managed portfolio range.

He said it would diversify the funds' US equity exposure away from large caps and reflect his "broadly positive" views on the dollar.

"We are cautious on markets," he said. "We still remain marginally underweight equities, but we have been increasing our equity exposure as part of our programme of slightly adding to risk."

The relative strength of Schroders' finances and Ms Jones's research team augmented the case for the Small and Mid Cap vehicle, he added.