ASX 200, All Ordinaries Explained: What Are Australia's Main Stock Indices?
Every evening news says "ASX 200 up 50 points" or "All Ordinaries closed higher". But what is ASX 200? What is All Ordinaries? Why does everyone talk about ASX 200 and not All Ords? If you understand indices, you understand 80% of market talk in Australia. This deep guide for Falkon Analytics explains everything - education only.
Part 1: What is a Stock Index?
Think of index like average temperature of Australia. You cannot measure temperature of whole country at one place, but you take 200 weather stations and average. Similarly, ASX has 2,000+ companies listed, you cannot track all. So you take 200 biggest companies and average their performance - that is ASX 200.
Index is not a company, you cannot buy index directly (but you can buy ETF that tracks it, like STW, VAS, IOZ). Index is benchmark - tells you how market is doing.
Part 2: ASX 200 (XJO) - The King of Australian Market
ASX 200 full name S&P/ASX 200, ticker XJO. Launched April 2000 by S&P Dow Jones and ASX.
What Companies in ASX 200?
200 largest companies by market cap on ASX, with liquidity filter (must trade enough). Market cap = Share Price x Shares. To be in ASX 200, company must be among top 200 by market cap AND have enough trading volume (liquidity).
Top 10 companies in ASX 200 make up ~45% of index weight:
| Rank | Company | Ticker | Sector | Approx Weight |
|---|---|---|---|---|
| 1 | BHP Group | BHP | Materials (Mining) | ~9% |
| 2 | Commonwealth Bank | CBA | Financials (Bank) | ~8% |
| 3 | CSL | CSL | Healthcare | ~5% |
| 4 | National Australia Bank | NAB | Financials | ~4.5% |
| 5 | Westpac | WBC | Financials | ~4% |
| 6 | ANZ Bank | ANZ | Financials | ~3.5% |
| 7 | Macquarie Group | MQG | Financials | ~3% |
| 8 | Wesfarmers | WES | Consumer Staples | ~2.5% |
| 9 | Fortescue Metals | FMG | Materials | ~2% |
| 10 | Goodman Group | GMG | Real Estate | ~1.8% |
So if CBA up 5%, it moves ASX 200 more than small company like Zip Co up 50%, because CBA weight 8% vs Zip weight 0.05%. This is market-cap weighted index.
How ASX 200 Calculated?
ASX 200 is market-cap weighted: Bigger company = more weight. Formula: Index = (Sum of (Share Price x Shares x IWF)) / Divisor. IWF = Investable Weight Factor (free float). Free float means shares not held by founders/government. For CBA, free float ~100%, for some companies with large founder holding, free float lower.
Index rebalanced quarterly (March, June, September, December). If company grows and becomes top 200, it enters ASX 200, and smallest exits. Example: In 2023, lithium companies like Pilbara Minerals (PLS) entered ASX 200 due to lithium boom, while old companies like AMP exited.
Part 3: All Ordinaries (XAO) - The Oldest Index
All Ordinaries full name All Ordinaries Index, ticker XAO, launched January 1980. It includes ~500 largest companies by market cap on ASX (almost all listed companies except tiny ones). Originally included all companies (hence All Ordinaries), but now ~500 due to liquidity filters.
All Ordinaries includes more small and mid caps than ASX 200. So if small caps doing well, All Ords may outperform ASX 200. If big banks and miners doing well, ASX 200 may outperform All Ords.
| Feature | ASX 200 (XJO) | All Ordinaries (XAO) |
|---|---|---|
| Companies | 200 largest | ~500 largest (All Ords) |
| Launched | April 2000 | January 1980 |
| Weight | Market-cap weighted, free float | Market-cap weighted |
| Coverage | ~85% of ASX market cap | ~95% of ASX market cap |
| Used For | Benchmark for funds, ETFs (STW, VAS), news | Historical benchmark, some funds |
| ETFs Tracking | STW (SPDR ASX 200), VAS (Vanguard ASX 300), IOZ (iShares ASX 200) | XAO does not have direct ETF, but VAS tracks ASX 300 which is close |
Part 4: Other Important ASX Indices
- ASX 300 (XKO): 300 largest companies, includes ASX 200 + next 100 mid caps. VAS ETF tracks ASX 300.
- Small Ordinaries (XSO): Companies from 101-300 in ASX 300 (i.e., small caps outside ASX 100). For small cap investors.
- ASX 20 (XTL): 20 largest companies (big banks + BHP, Rio). Very concentrated.
- Sector Indices: Financials (XFJ), Materials (XMJ), Healthcare (XHJ), etc. If you want to know how banks doing, check XFJ.
Part 5: Why ASX 200 Matters for You?
- Benchmark: If your portfolio up 5% and ASX 200 up 10%, you underperformed market. If you up 15% vs ASX 200 10%, you outperformed.
- Superannuation: Most Aussie super funds (AustralianSuper, HESTA, Hostplus) have large allocation to ASX 200. Your super performance linked to ASX 200.
- ETFs: If you buy VAS or STW, you are buying ASX 200/300. Understanding index helps understand ETF.
- News: When news says market up, they mean ASX 200 up.
Part 6: How to Invest in ASX 200? (Education, Not Advice)
You cannot buy XJO directly, but you can buy ETF that tracks it:
| ETF | Tracks | Management Fee | Provider |
|---|---|---|---|
| STW | ASX 200 | 0.05% | SPDR (State Street) |
| IOZ | ASX 200 | 0.09% | iShares (BlackRock) |
| VAS | ASX 300 | 0.10% | Vanguard |
| A200 | ASX 200 | 0.04% | BetaShares |
Example: VAS holds 300 companies, top holding CBA ~8%, BHP ~9%, etc. If you buy $1,000 of VAS, you indirectly own $80 of CBA, $90 of BHP, etc. Diversified.
ETFs settle T+2 via CHESS to your HIN, like shares.
Part 7: Real Example - ASX 200 During COVID and Mining Boom
COVID crash March 2020: ASX 200 fell from 7,100 to 4,500 (-36%) in 1 month due to panic. Then recovered to 7,500 by 2021 due to stimulus, iron ore boom. Mining companies (BHP, FMG) drove recovery because iron ore price went $80 to $230.
2022-23: ASX 200 flat due to interest rate rises, banks and miners offset.
Key Takeaways
- ASX 200 = 200 largest companies by market cap, ~85% of ASX market, market-cap weighted, rebalanced quarterly, ticker XJO.
- All Ordinaries = ~500 largest companies, oldest index from 1980, ticker XAO, includes more small caps.
- Top 10 companies (BHP, CBA, CSL, NAB, WBC, ANZ, MQG, WES, FMG, GMG) make up ~45% of ASX 200 weight, so they move index most.
- You cannot buy index directly, but buy ETF like STW, VAS, IOZ, A200 that tracks it, via CHESS HIN.
Glossary
ASX 200 (XJO): 200 largest companies by market cap, benchmark for Australia.
All Ordinaries (XAO): ~500 largest companies, oldest index.
Market Cap: Share Price x Shares, size of company.
Free Float: % of shares available to public, not held by founders/government.
Rebalance: Quarterly review where companies enter/exit index.
ETF: Exchange Traded Fund - basket of shares tracking index, trades like share.
FAQs
What is difference between ASX 200 and All Ordinaries?
ASX 200 = 200 largest, All Ords = ~500 largest. ASX 200 more concentrated in big banks/miners, All Ords includes more small caps.
Which is better - ASX 200 or All Ordinaries?
Neither better, just different. Most funds and news use ASX 200 as benchmark because it covers 85% of market and is more liquid.
Can I buy ASX 200 directly?
No, you buy ETF that tracks it, like STW, VAS, IOZ, A200 via broker with HIN.
Why does ASX 200 move when CBA or BHP moves?
Because ASX 200 market-cap weighted, CBA and BHP weight ~8-9% each, so they have big impact. Small company up 100% barely moves index.
Disclaimer: Education only. Not financial advice. Indices data from S&P Dow Jones and ASX. ETF fees and holdings change, check PDS. Past performance not indicative. Seek licensed AFSL advice. Falkon Analytics independent research.