Fujino said he bought shares of Koshidaka, a founder-run company valued at 23 billion yen, because membership at its chain of women's fitness clubs has doubled in three years to 453,000 in May. The stock has added 21 percent this year, compared with a 0.6 percent advance on the Nikkei 225.

"If you invest in companies that have decisive leadership, like ones that are run by founding families, you can beat the benchmark index," he said.

Companies led by their founders account for half the top 10 performers on the Topix, the country's broadest stock measure, in the past five years. These include food-court restaurateur Toridoll Corp., which more than tripled in value, and online medical information provider M3 Inc., which is up 134 percent.

Fujino left Goldman Sachs in 2003 to start an advisory company and five years later opened the Hifumi Fund, which he markets directly to individual investors at seminars and on his website. He said he was inspired to go out on his own after meeting more than 5,000 Japanese executives during his 20 years managing funds.

Hifumi Fund

Hifumi is ranked the second-best performing global value fund in Japan this year, according to data compiled by Bloomberg, and has outperformed its peers by 56 percent since it began in October 2008, according to data compiled by Bloomberg.

Fujino isn't the only one profiting by steering clear of Japan's biggest companies. Seven of the nation's top 10 performing domestic long-only equity funds are small- and medium-cap funds, according to rankings compiled by Bloomberg.

"Big Japanese companies have a hard time adapting to change," said Sato Yamato, professor of management at Keio University, the nation's top-ranked private college. "There aren't a lot of the strong leaders we need because this is a culture where the nail that sticks out gets hammered down."

Olympus Scandal

Former Olympus Corp. President Michael Woodford was fired by the company's board when he questioned outsized payments to advisers. The fees were later revealed to be part of a conspiracy to hide investment losses. The $1.7 billion cover-up cost the company about half its market value and added to concern about corporate governance at the country's biggest companies.

A scarcity of independent board members and cross shareholdings among companies placed Japan 35th out of 38 countries, behind Greece and Indonesia, in a 2009 ranking of corporate governance by Governance Metrics International.

The biggest corporations are often more interested in showcasing new technology rather than giving consumers what they want, Fujino said, offering Sharp Corp.'s tablet computer as an example. The fact that the device, called the Galapagos, also serves as a television remote control and a wireless router hasn't kept it from ranking 28th in sales behind Apple Inc.'s iPad, according to price comparison site Kakaku.com Inc.