Tokyo Price Index (TOPIX)

Key takeaways
* TOPIX is a capitalization-weighted index published by the Tokyo Stock Exchange (TSE) that tracks all companies listed in the TSE’s “first section” (Japan’s largest firms).
* It provides a broad, market-capitalization–based picture of Japanese equity market performance, in contrast to the price-weighted Nikkei 225.
* TOPIX is used as a benchmark and is available to investors via index-tracking funds and ETFs.

What TOPIX is

TOPIX (Tokyo Price Index) measures the aggregate market capitalization of all firms in the TSE’s first section. The index uses a base date (January 4, 1968) and is scaled so that the market capitalization on that date equals 100 points. It is calculated and published by the Tokyo Stock Exchange and serves as a broad benchmark for the Japanese stock market.

How TOPIX differs from the Nikkei 225
* TOPIX: capitalization-weighted and includes all first-section companies (broad market coverage).
* Nikkei 225: price-weighted and composed of 225 selected blue-chip stocks (narrower coverage).

Sector and subindices

TOPIX is broken into sector indices by classifying constituents into 33 industry categories (as defined by the Securities Identification Code Committee). Examples include construction, machinery, retail trade, banking, pharmaceuticals, real estate, and transportation.

The TSE also publishes several TOPIX-related subindices and series, such as:
* TOPIX New Index Series
* Size-based TOPIX subindices
* TOPIX sector indices
* Tokyo Stock Exchange Dividend Focus 100 Index
* Tokyo Stock Exchange REIT Property Sector Index Series
* Tokyo Stock Exchange Mothers Index

Free-float methodology and its impact

TOPIX transitioned to a free-float weighting system in phases from 2005 to 2006. Under free-float, only shares available for public trading are counted when determining a company’s index weight. This reduced the influence of cross-held shares—common in Japanese keiretsu business groups—on index weights and made TOPIX’s composition more representative of shares actually tradable in the market.

Notable special indices

TOPIX Core 30 is a capitalization-weighted subset that tracks 30 large, highly liquid TOPIX constituents. It began on April 1, 1998, with a base value of 1,000 and includes major Japanese corporations like Toyota, Sony, Canon, Mitsubishi, and Honda.

How investors gain exposure

Investors cannot buy an index directly, but they can invest in funds and ETFs that replicate TOPIX or its subindices. Examples include ETFs tracking the TOPIX Core 30 and broader TOPIX-tracking ETFs offered by major asset managers. These products aim to deliver performance similar to their reference TOPIX series.

Conclusion

TOPIX is the broad market-cap benchmark for Japanese equities, offering comprehensive coverage of large-cap domestic companies on the Tokyo Stock Exchange. Its free-float methodology and range of sector and size subindices make it a widely used tool for benchmarking and passive investment strategies.