Martin Currie is hedging its exposure to Japanese investments because of fears of further deterioration in the Asian economies.
The move comes as Imro warns that fund managers may not be making inves tors sufficiently aware of the increased volatility of Asian funds.
Imro also highlights the need for firms to maintain liquidity levels and settle transactions quickly.
Martin Currie is concerned that the yen looks like it will remain weak and that the potential abolition of foreign exchange controls may cause further drops as assets are moved offshore for higher returns.
The Edinburgh fund manager is hedging 30 per cent of its £90m Japan fund and 50 per cent of its international funds' Japanese exposure.
It says its hedging involves locking cash into fixed exchange rates to reduce the risk of currency fluctuations and investing in export-led companies such as Sony.
Martin Currie director Keith Donaldson says: "We cannot yet see the clear political will for major tax cuts which, in our view, are essential if the economy is to revive.
"Hedging does not mean that we have turned into bears on Japan. It is simply an insurance policy, lest our belief proves wrong that reform has to come."
Donaldson says that, if the yen falls any further, Martin Currie may consider further hedging of funds.
He predicts that there will be a further couple of years of sluggish economic growth in Japan.
Responding to international pressure to correct the domestic economic crisis, prime minister Ryutaro Hashimoto announced last week that he intends to take bold and flexible measures to reflate the economy.
But City analysts remain downbeat about the country's prospects and are concerned that specific tax-cutting measures still need to be spelled out.