Funds for Those Willing to Bet on Japan

T. Rowe Price Japan Stock has strong points. First off, the T. Rowe Price has earned its stellar reputation for producing above-average offerings -- and righting funds that don't pass muster. Also, the no-load fund sports a trim expense ratio of 1.35%.

For investors seeking a broader, bigger-cap, growth-inclined Japan fund, T. Rowe Price's offering is a worthy candidate.

3. Fidelity Japan Smaller Companies Fund

There's a belief among some Japan watchers that to truly revitalize the economy, what's necessary is a new generation that breaks free from the ossified mode of thinking that worked after World War II. If there is to be a new generation movement, it would take place among the smaller, domestic-oriented companies that trade on the Jasdaq.

Investors looking to take a chance on Japanese small-caps should consider the (FJSCX)Fidelity Japan Smaller Companies fund (ticker: FJSCX). Thanks to a modest bull market among small-caps the past few years, the $360 million fund has posted 11.94% average annual returns over five years, ranking it in the top 1%.

While Barclays Chow isn't sure the small-cap rally will continue, Fidelity Japan Smaller Company fund manager Kenichi Mizushita has been a solid stock-picker. And while the fund's focus practically guarantees volatility, Mizushita takes a risk-averse approach.

The no-load fund sports a 1.19% expense ratio. (If investors can get their hands on the hard-to-buy Dimensional Japanese Small Company fund -- a small-value index fund with the ticker symbol DFJSX -- would be well-served by that offering as well.)

4. Indexer's Choice: Vanguard Pacific Stock Index

For investors looking for the low-cost, market-matching virtues of an index fund in Japan, the (VPACX)Vanguard Pacific Stock Index fund (ticker: VPACX) is the way to go.

The $1.72 billion fund isn't a pure Japan fund. It has about three-quarters of its assets in that country, with the remainder investing in Australia, Hong Kong, Singapore and New Zealand -- mirroring its benchmark MSCI Pacific index. That has smoothed out the volatility a bit, and helped lift the fund's returns to the top decile of its peers over one and three years, and better than average over five and 10 years.

The no-load fund's biggest virtue: the 0.37% expense ratio.

For a pure index play on Japan, check out the iShares MSCI Japan Index fund(EWJ), an exchange-traded fund that focuses exclusively on Japan. With a trim 0.84% expense ratio, the ETF gives you cheap exposure to the Japanese market.

P.S. -- I can't take full credit, or blame, for being the first person on TheStreet.com to suggest dipping into Japan this year. Contributor and MaxFunds.com co-founder Jonas Max Ferris gave his reasons for liking Japan in late March.

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