Bermuda-based Orbis Investment Management Ltd. has scored it big in the tough Japanese stock market.

Orbis had the best performing Japanese equity fund in 1998 according to Standard & Poor's Micropal Ltd. The Orbis Japan Equity (Yen) Fund earned an annual return of 24.6 percent in Japanese yen, or 43.6 percent in dollars.

That's in a market hat declined by seven percent and is now entering the ninth year of being a bear. So far this year the fund is up about 3.5 percent.

The performance placed the fund first out of 107 offshore Japanese funds surveyed by Micropal. The fund was launched at the beginning of 1998 and in June added a version managed and priced in dollars. The two funds have net assets of $150 million.

Orbis manages a number of funds from Bermuda, including the Orbis Global Equity Fund. Orbis director Geoffrey Gardner said the company launched the funds in the belief its approach to stock picking was effective in depressed markets. The approach was proven in the Japan portfolio of the Global Equity Fund.

"At the end of 1997, Japan was nearing the end of the eighth year of an unusually severe bear market,'' he said. "Despite this, the Japanese shares selected for our Orbis Global Equity Fund have excelled for several years, outperforming their benchmark by approximately 13 percent in each year from 1995 through 1997.'' Mr. Gardner said the company shares investors concerns about the risk in Japan especially that arising from the banking sector. Investors in global equities face a dilemma right now, attracted to markets that are performing well and uncomfortable with markets that are not.

Since 1989 the US stock market has risen by 347 percent, while the Japanese market has fallen 57 percent.

"Superficially, it is now a more comfortable decision to invest in the US than in Japan,'' he said. "However, it is more logical to do the reverse. To use an analogy, would you buy a house in a property market that has already soared or in one that has slumped? "We are convinced that the risk of investing in US equities is high because the stock market is experiencing a speculative bubble whereas we perceive that the opposite is true in Japan.'' The funds are listed on the Bermuda Stock Exchange and require a minimum $50,000 initial investment.