Export recovery drives undervalued sector

Outperforming their large-cap brethren, Japan's smaller companies have driven a sector gain of 42.6% over one year with value still to be found

Over one year to 6 April the IMA Japanese Smaller Companies sector gained 42.6% with all seven funds delivering returns higher than 34% and the top three up more than 45%, according to Morningstar. The sector includes funds investing at least 80% of their assets in Japanese equities of companies which form the bottom 30% by market capitalisation. It has outperformed the larger cap IMA Japan sector, which shows an average rise of 27.6% over one year. Reflecting fundamentals Chisako Hardie’s £25m Axa Framlington Japan Smaller Companies fund is ranked fourth over one year, up 42.1%. ...