Hedge fund traders are jostling for a slice of the action in Japan this week as the biggest-ever rebalancing of the Topix equity benchmark comes into effect. A reshuffle impacting more than 700 stocks is expected to trigger around $60 billion of passive trading at Thursday’s close, driven by investors like exchange-traded funds that adjust their portfolios to track the index. The index rebalancing — the latest step in a yearslong effort by Japan Exchange Group to make the Topix more investable — will kick off on Friday and be implemented across eight quarterly phases through mid-2028.
The shakeup includes deletions, additions and free-float weight adjustments. That is offering a potential boon to arbitrageurs and other hedge fund traders who are predicting the winners and losers.
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