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- New Equity Index May Overcome Problems of Capitalization-Weighted Indexing
New Equity Index May Overcome Problems of Capitalization-Weighted Indexing
Financial Research Department Chief financial engineer Shingo Ide
We apply a new indexing method developed in the U.S. to Japanese equities. Backtesting of the new index indicates a significant improvement in risk-return efficiency over the TOPIX index. While TOPIX is now the prevailing benchmark for equity investment, the new method offers an opportunity to consider alternatives.