Japan’s startup equity gauge has accelerated gains in the past few weeks to nearly catch up to the benchmark index, as investors look to smaller stocks to broaden opportunities to ride one of the year’s hottest rallies.
The TSE Mothers Index is now up 18% this fiscal year to date, compared with the 21% gain in the Topix that has left U.S. and global peers in the dust. The Topix has been driven by venerable names including Toyota Motor and the trading houses favored by Warren Buffett, while Mothers’ biggest drivers include young firms engaged in artificial intelligence, fintech and human resources technology.
"To make money in Japan, you can invest in international companies that are headquartered in Japan,” Masakazu Takeda, a portfolio manager at Sparx Asia Investment Advisors told Bloomberg TV. "You can also invest in small-cap companies that have innovative business models that can grow in a very mature economy.”