Contrarians' Day: It's Time to Consider Japan

And Mark Headley, who has run the $8.5 million-in-assets fund since its December 1998 inception, sees some real promise in Japan these days. The 31 companies in the fund run the gamut from big names such as Honda to micro-cap companies like fledgling Internet broker Monex. The unifying theme among the holdings is a "growth at a reasonable price" bent. The separate bets on small-caps and big-caps provide the fund with a bit of a hedge, smoothing out the bumps when either group surges or tanks. While Japan clearly isn't out of the woods, Headley is growing increasingly confident about the country's prospects -- click here to read today's companion interview with the skipper.

The fund has shed 22% a year on average over the past three years, according to Morningstar. While that sounds and is lousy, it beats 57% of its category peers. So far this year, the fund is up 7.97%, beating 98% of its peers. Make no mistake, however: The reason to tap into Japan isn't recent performance. Matthews Japan's conservative approach to the country should make it well-positioned for the future.

The no-load fund's 1.91% expense ratio runs above the other funds on the list, but below the 2.12% category average, according to Morningstar.

2. T. Rowe Price Japan Stock

The $98 million (PRJPX Quote)T. Rowe Price Japan Stock fund (ticker: PRJPX) has a few question marks swirling around it -- besides the gigantic question mark that is Japan itself -- but it nonetheless makes a solid potential choice for investors looking to dip a toe into Japan.

The fund got a new lead manager in Campbell Gunn at the end of 2002, but the new hand has long experience running institutional money and two longtime co-managers remain. A new skipper might be justified, since the fund hasn't managed the past few lousy years with aplomb: Its three-year average annual loss of 26% trails 78% of its peers. The fund's growth-oriented bent -- telecom and mobile-phone companies such as NTT DoCoMo(DCM Quote) are among its favorites -- may not play well in a nation facing a low-growth environment.