Axyon AI Top 40 Japan Index: Seven Months On
A difficult first month, then a clear lead
Launched at the end of March 2026, the Axyon AI Top 40 Japan Large/Mid Cap Index, calculated by Morningstar Indexes, had a difficult first month. In April, the index fell 3.4%, while similar benchmarks such as the Amundi MSCI Japan ETF gained 5.6% and the Amundi TOPIX ETF gained 6.5%.
Since then, the picture has changed. The index has returned 22.4% in yen so far this year, compared to 13.3% for the Amundi MSCI Japan ETF and 16.1% for the Amundi TOPIX ETF, leading by 9.2 and 6.3 points respectively. Most of that lead was built in live trading: from inception on 31 March to 23 October*, the index returned 16.7%, versus 9.0% and 14.4% for the two ETFs.
Everything to the right of the dashed line is live performance.
How the index is calculated
The index draws on a universe of 179 Japanese large and mid-cap stocks defined by Morningstar. Each month, Axyon AI's predictive models read market, fundamental and alternative data to forecast relative performance, and the 40 names with the strongest signals make the cut.
Constituents are weighted by free-float market capitalisation. The monthly rebalance keeps sector exposure broad enough to meet UCITS diversification requirements. Simply put, the portfolio is rebuilt every month around fresh forecasts under a transparent rulebook that Morningstar calculates independently.
The record in numbers
We compare the index against two funds an allocator can buy today: the Amundi MSCI Japan ETF and the Amundi TOPIX ETF, both in their JPY-accumulating share classes. The live record tells the clearest story, so we start there.
The higher return came with lower risk. Volatility was 3.5 to 5 points lower than both ETFs, and the Sharpe ratio of 1.56 is over 50% higher than that of the Amundi TOPIX ETF and nearly double that of the Amundi MSCI Japan ETF. The deepest fall of the year was also two points shallower.
Where the gains came from
Two stretches did most of the work. In July, the index gained 9.8%, while the Amundi MSCI Japan ETF lost 2.5% and the Amundi TOPIX ETF barely moved. October followed a similar pattern: as the two ETFs fell between 3.5% and 4.9% in the first three weeks, the index added 2.3%.
The quieter months matter as much. In May, June, and August, the index trailed at least one ETF but never by more than 3 points in any month. The gains from stronger stretches were kept rather than given back.
Looking ahead
Seven months is a short window, and past performance does not guarantee future returns. Still, the live record since 31 March offers investors what a back-test cannot: evidence of how the signals behave in real markets, measured against funds allocators can buy today.
We will keep reporting as the record lengthens. In the meantime, the full methodology, constituents and daily levels are available on the Morningstar Indexes page.
*Data Source: Period: From 5 January to 23 October 2026; index on gross returns in JPY, ETFs on adjusted NAV (LU1781541252, LU1681037781).