The ASX 200 is the benchmark index of the Australian Stock Exchange (ASX). It is comprised of the 200 largest listed ASX stocks. The ASX 200 index exists in order to give investment managers a benchmark against which they may measure their performance. The constituents are selected by a committee from Standard & Poor’s and the ASX and the list includes only companies. Exchange Traded Funds and Listed Investment Companies are ignored. The index is capitalisation weighted which means that the company’s contribution to the index is relative to its total market value. This figure is adjusted by a divisor so that the index changes whenever the share price changes not the market capitalisation. Together these 200 companies represent approximately 80% of Australian equity market capitalisation. The ASX 200 is also tracked by three listed ETF’s. These products allow investors to gain exposure to the ASX 200 by purchasing single shares, instead of having to by shares in each individual ASX 200 company.
The ASX 200 is re-balanced quarterly. On rare occasions an intra-quarter re-balance may occur when a significant event occurs such as a merger or a delisting. ASX 200 companies range in size from $290m market cap up to $1.5B dollars or more.