Espe also believes that Japanese equities have a good long-term outlook. Japan’s public pension fund, which holds over $1 trillion in assets, also has a favorable outlook on Japanese stocks, adopting a more aggressive investment strategy by shifting away from government debt into foreign and domestic equities.

Moreover, Japanese stocks remain cheap relative to the U.S. market based on revenue and earnings, Espe added.

For instance, EWJ shows a 15.8 price-to-earnings, whereas the S&P 500 index is trading at a 18.9 price-to-earnings, according to Morningstar data.

Brian Goodstadt, an adviser at Paragon Capital Management, says Japan’s market is “probably the cheapest stock market in the developed world.”

Adrian Cronje, chief investment officer at Balentine LLC, also pointed out that Japan is enacting structural reforms, which may provide the potential for additional stock-market gains, such as steps to encourage greater emphasis on shareholder value, including pushing for buybacks and dividend hikes, pension reform and deregulating.

For more information on Japan, visit our Japan category.

Max Chen contributed to this article.