We deliberately diversify our manager selections and yet, whether small cap value or small cap growth, large cap international or mid cap domestic, UK-based or in Tokyo, all are tipping us the wink on Japan.Value managers claim the stores of value they have been hoarding for years are about to be unlocked. Many stocks yield more than bonds and dividends are on the increase in general or even appearing for the first time. Growth managers claim that intra-regional trade is making up for any fears of a US slowdown. Export fans state that the US is not slowing anyway so profits will continue to grow. They also point to new management practices enhancing growth prospects further. What about the economy? Well, deflation has hit Japan hard over the past decade but looks like coming to a technical end soon if trends of recent months continue. Asset prices – chiefly property – are rising and occupancy rates increasing in both commercial and residential. Money supply is growing and the banking system appears to be starting to function again. Japan has been the great savings nation of the Western world but recently consumer spending has moved off rock bottom. Jobs to applicants ratios are improving which helps this along, too. Yet in the midst of all this, the government has been dissolved and an unexpected election has been called for September. There are clearly risks during this period of political uncertainty but the polls at the time of writing point to a reformist win. At the corporate level, profits are growing and balance sheets are being reformed and we have just seen that rarest of things – a management buyout – to complement the takeover activity that is also taking hold. In the course of our meetings with fund managers, we rarely get a consensus view from a sector but when we have in the past, it has proved a powerful piece of inform-ation. Right now we have this consensus in Japan. The problem is that many different types of fund manager think their fund is ideally positioned to capture the best returns but by definition they cannot all be right. A rising sun may offer gains for all but, as ever, fund selection will be key.