Polar Capital managers George Godber and Georgina Hamilton have admitted to making mistakes in the first half of the year, leading to an "immensely frustrating" period for the pair's UK Value Opportunities fund.
Although the fund has outperformed over one year to 18 July, returning 10.9% versus returns of 9% by the IA UK All Companies sector, according to FE, it underperformed in the first half of the year - losing 0.4% versus the sector gain of 2.6%.
The FTSE 100 saw a sharp rise between 26 March and 21 May but, although the fund performed well earlier in the year, it lagged this 13% rally.
Looking at their holdings, areas where the portfolio was underweight, such as food retail, pharmaceuticals and oil, were those that performed well during the period, helped by the rising oil price and a potential merger between Sainsbury's and Asda.
"We are immensely frustrated with our performance and not being top quartile," the pair said.
"We have made investment mistakes but we are happy with the portfolio we have. While we are disappointed to be behind the market, we will never change our process or approach to suddenly start chasing the market when things get racy."
They said the market was very thematic at the moment with investors "running away with" certain themes and that stock-by-stock correlation had been rising, which meant fewer opportunities for individual stocks to outperform.
One of these thematic ideas was 'tech disruption' and the pair felt this had, almost overnight, become a major factor to consider when selecting a company.
Companies such as Amazon, Uber and Just Eat are disrupting traditional players and, as a result, the managers said they are trying to avoid anything likely to be affected by these types of companies. The threat of disruption could be worse than the impact of Brexit, the pair felt.
"Tech disruption was not as important, even two years ago, but a combination of factors that have come together has meant it now feels more important than it ever did.
"Amazon will kill you faster than Brexit. Brexit will take a while to come through and for firms to feel the ramifications but Amazon can kill you in six months."
Meanwhile, the managers said they continued to hold exposure to challenger banks but were "frustrated" that acquisitions of companies had not impacted the wider sector.
Two of the fund's holdings, TSB and Aldermore, have been acquired by Sabadell and FirstRand respectively, but there have also been acquisitions of Virgin Money by CYBG and Shawbrook by private equity firms.
However, they said this M&A only had a minimal impact on the sector as a whole, meaning it was an "unloved area" of UK equities.
"We still have many holdings in the area but the sector has not been widely affected by all the M&A as you would have expected compared to other sectors, it has been deeply frustrating.
"They are still cheap and underappreciated. It is an attractive and unloved area."