Japanese Smaller Companies funds invest wholly or mainly in smaller Japanese companies. Their definition of what constitutes small varies between funds. Funds that invest in large capitalisation companies have their own sector. Japan was for some time the world’s second largest economy until it was overtaken by China. Its economy and its stock-market have stagnated for some time and various governments have sought to revive it with varying degrees of success. Many managers of Japanese smaller companies funds would argue that there are a number of small entrepreneurial companies in the country that have learned how to grow in spite of the lack of economic growth. Smaller companies are generally considered to be riskier than larger ones usually because their product and customer bases are less well diversified and they can find it harder to get finance.
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