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David Clark, the investment division's UK smaller companies manager, said he will not take extraordinary bets to boost returns or stray outside of less obscure companies with quality earnings.

"At the moment, it is about grinding out the performance, with very little in the way of big-picture calls," he said. "It is not what I'd call fun, but in markets like these, it's important to grind away and not take silly risks that can blow up in your face."

Mr Clark said he is seeking visible underlying earnings, predictable management and healthy cash flows. According to his analysis, valuations are low, with a market p/e ratio of less than 10 times earnings.

"However, that means some stocks are now at a 40-50 per cent premium to the market, which feels expensive just now," he said. "But we must bear in mind that the market was trading at a p/e of 14-15 times earnings not so long ago."

Mr Clark's £95.7m Resolution Smaller Companies fund consists of 65-90 holdings, each of which normally constitutes no more than 3 per cent of the portfolio. However, as of 31 July, the fund's top five holdings were all more than 3 per cent, according to the fund fact sheet.

The fund has performed better than most of its peers over one year to 11 August, finishing 13th out of 55 in the sector with losses of 16.6 per cent against a peer group decline of 21.5 per cent.

Over three years to 11 August, the portfolio improved its position to third out of 47 in the sector, with gains of 30.8 per cent against a mean of 8.5 per cent.

The FTSE SmallCap index, which Resolution Asset Management has described as "the main hunting ground for the fund", lost 30.2 per cent over one year and 11.5 per cent over three years, according to Financial Express.