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Shares in the business were on course for their worst day in 25 years, falling 12.9% to 585.4p, as investors digested guidance of 7% full-year organic revenue growth, down from the previous forecast of 8%.
Citywire AAA-rated Terry Smith's £13.4 billion Fundsmith Equity is the largest single fund investor in Sage, according to Thomson Reuters data.
Smith held Sage in his fund since 2014, although the stock lies outside his top 10 holdings.
The software provider meanwhile accounts for 5.8% of Citywire AA-rated Nick Train's £4.8 billion Lindsell Train UK Equity fund, and 5.7% of his £1.2 billion Finsbury Growth & Income (FGT) investment trust. Both are top 10 positions.
Russ Mould, investment director at AJ Bell, said investors were wary of further disappointments from Sage.
'Despite trimming expectations today, software business Sage is in the unenviable position of relying on a stronger second half to meet guidance,' he said.
'Often in this scenario a company fails to make up the shortfall, raising the spectre of another warning down the line.'
Ian Forrest, investment research analyst at The Share Centre, said the news was a blow to the company's 'defensive' credentials.
'This is clearly disappointing news for what is regarded widely as a fairly defensive business so it is no surprise to see the shares coming off 18% in early trading as this update raises a question over the company's growth targets,' he said.
'Given the news today we continue to believe that the shares are no better than a "hold" for medium-risk investors.'
Sage has been among the worst performers in the FTSE 100 this year, down 26% in 2018.
The slump in the shares has added to a tricky start to the year for Smith, after an ill-timed investment in Facebook (FB.O) just before the social media giant's data scandal sparked a sell-off of the shares.
Train had meanwhile been eyeing the drift in Sage shares even before today's slump, as he looks for investment opportunities ahead of a likely influx of cash from the takeover of fellow holdings Fidessa (FDSA) and Dr Pepper Snapple (DPS.N).