The manager is focused on companies whose earning recoveries are gathering pace in the three areas of internet services, semiconductors, and green technology.
Carmaker Nissan is set to start producing over 50,000 electric vehicles in Japan this year, and over 150,000 in the US from 2012. Higaki says this is an opportunity to invest in component and equipment manufacturers, and has included electrode and electrolyte producers Hitachi Chemical and Stella Chemifa in his portfolio.
"Many see the environmental electric car concept as just a dream idea, but it’s not. 2010 will be the beginning of the age of electric vehicles," he says.
Another theme Higaki invests in is online gaming. The manager has been following the internet as an investment for a long time, but says the trends keep changing. While many of the funds which focus on the country look for Japanese-listed companies with global exposure, this is one investment which is Japan-centric.
"In Korea and the US, people play games on their PCs, but in Japan they prefer the convenience of handsets, which also use social networking," he says.
"These games are initially free to play, but you have to pay a subscription to boost your ratings and beat your friends. They hook you in for free and you pay later," he adds.
The manager has added the social gaming site Gree to the trust’s portfolio. It only has four games – one of which involves fishing, and purchasing better equipment online to catch bigger fish – but it had more than 16m views last month. The manager says it has good potential for growth.
A third theme which the manager thinks will benefit Japan is LCD and semiconductor technology. As consumers seek to replace their TVs with LCD screens, demand for material suppliers is on the up – and has room for growth. The manager has added LCD glass substrate manufacturer Asahi Glass to the portfolio.
Performance of funds over 1-yr
Source: Financial Express Analytics
Over a one year period the trust returned more than its Asia Pacific Ex Japan sector, and its MCSI Far East ex Japan benchmark. It took on more risk than both, however; 62 per cent return against 25 per cent volatility, compared to 56 per cent return in the sector at 19 per cent risk. The benchmark returned 43.4 per cent against 19.7 per cent risk.
"Japan has been a big disappointment for a lot of people for a long time," James Brown, investment trust analyst at Wins Research says.
"But based on cheap valuations and recent recoveries it could be due for a bounce."
While Higaki is less positive on the outlook for Japan's Topix index, because the yen appreciated against other currencies in late 2009, he still sees value in Japanese companies.