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Graham Muirhead, head of investment for Asia Pacific ex-Japan at Nomura Asset Management, which manages half of the manager of managers vehicle, said he had been "surprised by the decline in the Japanese economy" and anticipated it would continue to be weak, if not weaker than others in Asia.

"Over the last year we'd been steadily increasing our weighting to Japan. We increased because we thought Japan would be defensive. The massive strength of the yen helped, but it was not as defensive as we hoped. We are starting to reduce weightings. Recently we've started to add more to Asia."

Muirhead said exports, which are a key component of the Japanese economy, have suffered from the outperformance of the currency, although the yen has started to weaken due to negative economic data.

He added the government may find it difficult to incentivise consumption in the country, which is notably oriented towards savings.

"Japanese companies are quite aggressively cutting costs. The workforce is shrinking, which is negative for consumption," he said.

"Asian governments have tended to run budget surpluses, so in this environment they can stimulate economies aggressively. Japan has not got that luxury.

"The Japanese government has a very high debt-to-GDP ratio. They're not going to get the base cuts other Asian countries will get.

"They won't get the same infrastructure spending. It's a more mature country, so you're not going to get a sharp economic expansion."

Investors have also cited the political instability of the country. With the exception of Junichiro Koizumi, Japan has had roughly one prime minister a year since the start of its financial crisis in the early 1990s.

The Liberal Democratic party has also held sway since the Second World War, with limited interruptions.

As a result of his outlook, Muirhead said, he had taken Japan from an overweight to an underweight in his portfolio, although Nomura does not typically take big bets against the index.

"Japan is 43 per cent of the pot and 45-46 per cent of the index. As a house, we do not look to take aggressive positions. If there's change, there's incremental change," he said.