Paul Marriage's Cazenove Absolute UK Dynamic fund saw performance hit last month when his hedge fund was met with heavy redemptions. Both the retail fund and the hedge fund hold many of the same positions.
Marriage had to offload holdings in his hedge fund to meet $70m (£47m) of redemption requests - about 61% of its assets - after the departure of former manager Neil Pegrum in April.
Many positions sold down were mid and small caps also held in his retail offering.
Managing director Robin Minter-Kemp says: "The two funds are virtually identical, so the selling of stocks by one is bound to be a short-term detractor to the performance
of the other. But it should bounce back.
"Considerations around reducing the size of a mid-cap fund are very different to bringing down the size of a mid- and small-cap fund."
Marriage says: "We were very careful to trade in a disciplined manner throughout May so as to mitigate some of the inevitable negative impact the selling had.
"In a stable market it would be a challenge. Given the exceptional volatility we have seen, a more unhelpful background could barely be imagined."
Absolute UK Dynamic fell 4.1% in May, but still beat the FTSE All Share's 6.6% decline, and the FTSE Small Cap's 7.6% fall.
Minter-Kemp says markets are thinner now than before the crunch, which exacerbates the impact of heavy selling.
Marriage expects to continue downsizing the hedge fund this month, but says he expects the headwind impact to be reduced to some extent.
