Scott McGlashan, the senior manager of the JO Hambro Japan fund, has ditched a third of his larger company holdings in favour of small firms.
About half of his £186.5m fund is typically invested in medium-sized companies, the rest in large and small caps.
Since November McGlashan has raised his allocation to small caps from 20% to 30%. This is a continuing process and McGlashan says he might top up by another 5-10 percentage points. (article continues below)
Market rallies in Japan are often led by large caps, he says. Overseas investors can miss the investment opportunities in small and mid caps.
“If the market continues to strengthen we will see more domestic participation,” says McGlashan. “There will be more positive earnings surprises in small and mid caps.”