'I am one of the usual boring people who joined Baillie Gifford as a graduate,'' says Sarah Whitley, who 24 years later heads up the biggest Japanese investment team outside Tokyo, which with its core of female managers epitomises the evolution of Scotland's biggest independent fund manager.

The studious mother-of-two runs Baillie Gifford Japan, which last month published results ranking it the top-performing Japanese investment trust over one, three, five and 10 years. She also leads the 12-strong team managing (pounds) 2.3bn of money in Japan, largely for institutions such as pension funds which must have exposure to what is still the world's second-largest economy.

Baillie Gifford's ''boring'' tradition has sustained a partnership structure almost unique in the industry. Whitley, a partner since 1986, is one of the firm's traditional breed of Oxbridge graduates, the raw material for one of the UK financial sector's few examples of successful organic growth.

She says: ''When I joined the focus was only on Oxbridge, it is less so now but they still provide the majority of our graduates I think we have recruited 38 graduates over the last five years and 37 of them are still with us, which is exceptional by industry standards.''

A southerner who moved to Edinburgh when she was 12, Whitley was a rowing blue at Oxford where she read experimental psychology. ''I would not claim it helps you understand the psychology of markets or anything, but it is a large complex area that you are trying to deal with by looking at numbers, and that bears some broad relationship to investment.''

Fund management is, she insists, fascinating. ''Graduates find it interesting both intellectually and in other ways. You can never stop learning, every day is different, there is always more information, and you are dealing with it both to form a view and make decisions and to discover whether you are right or wrong.''

Whitley's first posting in the firm in 1980 found her working on UK equities alongside Douglas McDougall, later managing partner, and the highly-regarded Max Ward, who in 2000 instead of retiring decided to set up the hugely successful Independent Investment Trust to manage the wealth of himself and his friends.

''Max is doing exactly the same thing. He didn't reinvent himself, he just reinvented his job,'' Whitley comments.

Japan is best known as the market of false dawns, where the stock market lost two-thirds of its peak value and is still awaiting a renaissance. But in the 1980s, Japan was the land of the rising sun. ''It hadn't really taken off, it was still seen as being a slightly exotic market,'' Whitley recalls. Then came the late 1980s' rush to the summit, followed by a decade of decline and disappointment, with the Asian slump of 1998 prompting only a zig-zag recovery.

She says: ''I worked in the market before the bubble, as well as during and after, which means that when a company comes up we can dig away in the file and find my note from 1983. The idea that some of these less well-known industrial companies have survived and are beginning to thrive again is quite interesting.''

Her team covers the entire investable Japanese market, not just the big familiar stocks.

''We believe we are the biggest team outside Tokyo, because I have been saying it for three years and nobody has contradicted me,'' Whitley says. ''We find it a tremendous strength to cover smaller stocks, because we hope to buy them sooner than large-cap managers will find them.'' Baillie Gifford Japan's 20 biggest stocks include just one household name, Canon.

Japanese companies have been restructuring and refocusing to compete head-on with the rest of north Asia, Whitley says, in a regional integration which will at some point see Far Eastern funds no longer invest in Asia ex-Japan, but Asia including Japan.

''On top of that, we have got the cycle. I was very bullish on the economy a year ago and that has proved right. There are some concerns that the cycle has turned in the last few months, but our view is that while 4% growth in 2004 will not be repeated in 2005, there will not be recession. And the longer growth continues above trend, the more likely it is that the financial situation has healed, the problems of the bubble have been dealt with, and Japan has been normalised. The really strong sign of that will be when the Bank of Japan abandons its zero interest rate policy.''

The team became convinced Japan had truly touched bottom when, in March 2003, the Standard newspaper declared that Japan was ''the next Argentina''. Whitley retorts: ''Argentina owed the world a lot of money. Japan is the largest net creditor nation ever and had a large current account surplus even through its troubled times.''

She acknowledges risks from the oil price, the US and China, Japan's chief trading partner, but says there is a ''real chance of growth in the current cycle being enough to heal the problems of the bubble''.

But hasn't Japan been the poor relation, a depressing sector to devote a fund management career to? Not a bit, says Whitley.

''There are 3500 companies in Japan, 1800 you can put money into and 100-plus new listings a year - a lot of those companies which have been diabolical for ages have started getting better. Even when things are bad economically, there is always something going on with some companies - that is the thing that has kept people interested.''

Tokyo is not Mount Fuji and masochistic telev ision shows any more than Scotland is tartan and haggis, says Whitley. ''People have a very distorted view. They are staggered when you tell them the conurbation of Tokyo is 33 million people, and that public transport actually functions.'' On her first visit to Japan, Whitley was assigned to relax at Tokyo Disneyland (''I have never been back''), but most memorable was the night at the Cavern Club in Roppongo, where five Beatles tribute bands perform one after the other (''they get better'').

Company meetings in Japan are strictly formal, especially introductions. ''You must have a business card or you can't be a proper person.''

Meanwhile, the chiefs of more than 200 Japanese companies, bristling with business cards, will now be beating a path to Baillie Gifford's smart new glass headquarters in the lee of Calton Hill in Edinburgh.

They may find that on the Japan desk, five out of 12 are women.

''By chance we have all ended up sitting in a block, surrounded by

our male colleagues,'' Whitley says. ''Somebody is going to think we

are making a point, but it is coincidence.''

INSIGHT

Born: 1958.

Educated: Oxford University.

Career: Joined Baillie Gifford 1980, Japanese team 1982, partner 1986, head of team 2001.

Personal: Married to a surveyor, two children, girl (13) and boy (10).

Hobby: Sailing.

Ambition: Definitely to sail round the world.