Hedge fund Verdad Advisers LP is preparing to launch a new Japan-focused fund targeting small-cap equities, as global investors increasingly look beyond blue chips for returns in Tokyo’s resurgent stock market. Founder Daniel Rasmussen said the fund could launch as early as this year and will extend the strategy of Verdad’s two micro-cap funds by identifying capital inefficiencies such as debt-heavy or cash-rich balance sheets. Unlike the existing funds, the new vehicle will target companies with market caps above $400 million. Still, he said Tokyo’s corporate reform drive is pushing more companies to adopt shareholder-friendly practices, creating opportunities for long-term investors. Japan’s small-cap stocks have significantly outperformed this year, with the MSCI Japan Small Value index climbing over 30%.