A top-performing equity fund is pocketing gains on Japanese chipmakers to buy shares left behind during the market’s world-beating rally.

The Alma Eikoh Japan Large Cap Equity fund, which is outperforming 99% of peers this year, has cut its position in Renesas Electronics Corp. by almost a third over the past month as the stock more than doubled in value year to date, according to James Pulsford, who co-manages the ¥126.6 billion ($875 million) fund. Some of that money went into “high quality” defensive names such as noodle maker Nissin Foods Holdings Co. and soap producer Kao Corp.

“We’ve recycled some of the things that have done well into some of the recent poor performers with strong fundamentals,” said Pulsford, a London-based fund manager at Alma Capital.

Pulsford’s view may serve as a reality check for those investors betting that tech shares will continue to surge amid an artificial intelligence boom that has helped lift Japan’s stock market to its highest level in 33 years. His take on consumer-staple stocks comes as analysts at Goldman Sachs Group Inc. recommend investors underweight sectors including food, energy, construction and pharmaceuticals.

Semiconductors are still the top allocation of the Alma fund, with a weight of more than 10%, according to data compiled by Bloomberg. Pulsford’s overweight position in chips has helped the fund return more than 30% this year, outperforming a 23% gain in the Topix.

While Pulsford said he would be “happy to buy more” shares of Renesas given the company’s long-term potential, the stock needs to cool down first. Shares are trading at 12 times expected earnings, double the level a year ago.

In the meantime, the fund manager is betting that Nissin Foods could benefit from strong margin growth as income disparity may drive demand for cheap products with good value. He expects Kao’s next quarterly results to bottom out as the company finally reaches a tipping point where pricing gains start to outweigh higher raw material costs.

The fund is also overweight defense-related companies such as Mitsubishi Heavy Industries Ltd. and NEC Corp., which Pulsford said will benefit from increases in government spending.

“We have relatively high turnover,” Pulsford said. “If we change our mind on the stock, I want to be able to sell it preferably within a week without much market impact.”