Sussex has been strongly advocating an active Japan equity exposure, either via hedge funds (long/short) or specialist long only managers, for a number of years now, and have been quite vocal about the opportunity in this space. This conviction was expressed early on to investors, including in past articles for The Hedge Fund Journal. The goal was to explain the rationale for the strong belief that Japan warranted an allocation on a standalone basis, irrespective of what macro views investors may hold on Japan. The stated view was that, unless investors ceased taking a simplistic, macro-based view on Japan, stopped trying to chase beta, and instead started focusing on the alpha opportunity presented by this market, they risked missing out on the real opportunity and the reason to get excited about Japan in the first place. Over the past 6 months, not a day seems to have gone by without yet another investment bank upgrading Japan to a “buy” or “overweight” rating. There has been a significant increase in investor interest as a direct result of this and corresponding asset flows into Japan (almost 2 trillion of net investment by foreigners into Japanese stocks were recorded in October alone, for example). In response to investor inquiries, Sussex has decided to provide allocators with a succinct overview of the Japanese hedge fund market, its anatomy, and thoughts on how to best approach such investments. It should be noted that, since our advocacy of investing in Japan began, many of the best managers, capable of rewarding existing investors with very attractive risk adjusted returns, have now hard closed to investors. Therefore, just as investors seem to have awoken to the hedge fund opportunity in Japan, the task of actually finding suitable hedge funds with capacity has become increasingly challenging. The following Q&A is meant to assist allocators in better understanding the market, its dynamics, and the opportunity.