"Panic selling has pushed prices really low. I think we could be set for a re-run of 2008 and, while it remains to be seen, the situation could even eventually be worse," he said. "We’re hoping to get stocks at really low prices and wait out the slump."
"The main thing we’ve been doing is switching from defensives to technology," he added. "The technology sector has been collapsing and we’ve found valuations really attractive. At this rate I wouldn’t be surprised if the fund went completely into technology stocks."
"As long as prices keep falling, we’ll keep buying. When markets stabilise we’ll be set for some big rises."
FE Alpha Manager Harker, who has for a long-time had an overweight position in Japanese financials, believes that the region’s banks, long avoided by international investors, now look poised to return to strength.
"We are completely maxed out on financials at the moment," he said. "It looks as though Europe has got the Japanese banking disease but with a 10-year lag. Now financials are falling apart everywhere except for Japan. Investors are unfairly against investing in Japan because they are looking backwards."
Performance of fund vs sector over 1-yr
Source: FE Analytics
Data from FE Analytics shows that GLG Japan Core Alpha has lost investors 6 per cent over the last year, underperforming the average Japan fund, which has lost close to 1 per cent.
"The fund’s performance is lagging the index but is doing so for very good reasons," said Harper. "Small cap growth stocks are outperforming large cap defensives but we are waiting for the world to turn in our favour and think that next year could be a really, really good year for us."
Japanese Smaller Companies is the third best-performing IMA sector over 12 months, with returns of 10 per cent, a testament to how well the economy has recovered from the earthquake.
"Logistical screw-ups from the earthquake have created shortages in manufacturing but things are getting back to normal now," continued Harker.
Japan’s industrial output was better than expected in July, with a trade surplus of 72.5bn yen (£572m).
"One of the big things affecting Japan is that China has stopped growing. Japan and Germany - as leading exporters - have been the biggest exploiters of Chinese growth and that is making life really difficult, but we are invested in defensive sectors which should be well protected," said Harker.
"We’re really pleased with the way things are going. I’m more confident now than I have been at any other time in my career."
Donald Farquharson, investment manager in the Japanese equities investment team at Baillie Gifford, says that few investors are taking notice of the opportunities in Japan.
"Japan appears at first glance to have few opportunities for growth investing, but as is often the case, first appearances can be deceiving," he said.
"While in real terms the economy has grown by just 0.6 per cent per annum over the past 10 years, this is only the view from the canopy."
"On the ground, there are many opportunities for investing in attractive growth companies and by focusing on individual investment cases."