One of the benchmarks for a country’s economy by looking at the performance of the index, the S&P/ASX 200 is the indices published by Australia.
The S&P/ASX 200 at a glance, is a set of stock price indexes comprising the 200 largest stocks in Australia by float-adjusted market capitalization.
For global investors, the S&P/ASX 200 index can reflect how the condition of large Australian companies from various segments and sectors is growing or declining.
- 1 What is S&P/ASX 200 Index?
- 1.1 History
- 1.2 Companies inside index
- 1.3 Top 10 shares company on ASX 2022
- 1.4 Companies sector
- 1.5 Group indices
- 1.5.1 S&P/ASX 200 A-REIT
- 1.5.2 The S&P/ASX 200 Bank
- 1.5.3 S&P/ASX 200 Communication Service
- 1.5.4 The S&P/ASX 200 Consumer Discretionary
- 1.5.5 The S&P/ASX 200 Consumer Staples
- 1.5.6 S&P/ASX 200 Energy
- 1.5.7 The S&P/ASX 200 Financial
- 1.5.8 S&P/ASX 200 Finance excluding A-REITs
- 1.5.9 The S&P/ASX 200 industrial
- 1.5.10 S&P/ASX 200 Information Technology
- 1.5.11 S&P/ASX 200 Materials
- 1.5.12 S&P/ASX 200 Utilities
- 2 S&P ASX 200 index methodology
- 3 Is S&P ASX 200 A Good investment?
- 4 S&P/ASX 200 index ETF
- 5 S&P/ASX 200 index futures
- 6 How do I invest in S&P ASX 200?
- 7 What is the difference between ASX and S&P?
- 8 Conclusion
What is S&P/ASX 200 Index?
The S&P/ASX 200 is one of the S&P/ASX family issued by Dow Jones Australia, which is the main index of the S&P/ASX family because it counts the 200 largest companies in Australia.
The S&P/ASX 200 is Australia’s indices that are useful for measuring the performance of the 200 largest stocks on the Australian Securities Exchange (ASX).
The shares must meet the requirements to enter the list of indices. Both primary and secondary stocks are listed on the ASX.
The history of the S&P/ASX 200 began in 2000 when Dow Jones Australia launched the S&P/ASX index series which then paved the way for Australian market innovation where ASX launched the s ASX SPI 200™, Index Futures and Options.
In 2001 the Global Industry Classification Standard (GICS®) was introduced for the Australian market. This year ASX launched the ASX SPI 200™, Index Futures and Options. and SSgA launches exchange-traded funds (ETFs), track the S&P/ASX 200 and S&P/ASX 50.
ASX lists ASX Mini-Index Futures contracts based on S&P/ASX 200, S&P/ASX 200, Property Trust, and S&P/ASX 50.
- SSgA launches an ETF that tracks S&P/ASX 200 Property Confidence Index.
- S&P Dow Jones index discontinued the previous use of 24 ASX sectors.
- Changes to the S&P/ASX methodology incorporate float adjustment.
- ASX launches S&P/ASX Buy-Write Index.
- SFE launches SPIDO (SFE SPI 200™), Intra-Day Options.
SFE launches SPIDO (SFE SPI 200™), Intra-Day Options.
S&P Dow Jones index launches S&P/ASX All Common Gold Indices.
The Australian Securities and Investments Commission which is an Australian regulatory body (ASIC) states that the S&P/ASX 200 is the benchmark under ASIC Corporations Instruments 2018/420. Taken history from SPGlobal.
Companies inside index
A company on the S&P/ASX 200 list has a weight relative to its total market value where the share price is multiplied by the number of tradable shares issued.
The number of shares in the S&P/ASX 200 does not always match the number of 200 shares, but companies that do not meet the criteria are omitted.
Therefore, every year there is a possibility of changes in the shares in the S&P/ASX 200 list.
Here are some of the companies in the S&P/ASX 200 taken from live data Marketindex.com.au. with measurement based on market capitalization:
- Betashares Australia 200 ETF.
- The a2 Milk Company Ltd.
- Betashares Australian High-Interest Cash ETF.
- Abacus Property Group.
- Australian Foundation Investment Company Ltd.
- AGL Energy Ltd.
- Auckland International Airport Ltd.
- Allkem Ltd.
- Ampol Ltd.
- Aristocrat Leisure Ltd.
Companies that are included in the S&P/ASX 200 list consist of various industry sectors, be it finance, banking, or real estate. The top 200 companies that include in the indices list can be broadly grouped into several categories.
S&P/ASX 200 A-REIT
This is an industry classification of REIT vehicles with income from rental returns.
The S&P/ASX 200 Bank
This is a classification of companies in the banking industry group.
S&P/ASX 200 Communication Service
is a category of industrial sector group under the communications services sector and sub-industry companies.
The S&P/ASX 200 Consumer Discretionary
This is a sensitive sector of companies as economic cycles include the automotive, household durable goods, textiles, and apparel and recreational equipment sectors. Hotels, restaurants, and other recreational facilities, media production and services, and retail and consumer services.
The S&P/ASX 200 Consumer Staples
This is a classification of companies that are less sensitive to economic cycles. For example, producers and distributors of food, beverages, and tobacco. Manufacturers of non-durable household goods and personal products. Food & drug retailing companies, hypermarkets.
S&P/ASX 200 Energy
This is a classification of companies in the energy industry such as supplying oil rigs, drilling equipment, and other energy-related services and equipment.
The S&P/ASX 200 Financial
This is a classification of companies in the financial sector such as banking, mortgage financing, consumer, specialty finance, investment banking, and brokerage.
S&P/ASX 200 Finance excluding A-REITs
This is a category of companies in the Finance sector except those classified as A-REITs.
S&P/ASX 200 Healthcare
This is a category of companies in the healthcare sector.
The S&P/ASX 200 industrial
This is a category of companies in industries such as distribution of capital goods, including aerospace and defense, construction, engineering, and building products, electrical equipment, and industrial machinery.
S&P/ASX 200 Information Technology
This is a company that falls under the IT classification such as Software & Internet Services developer.
S&P/ASX 200 Materials
This is is a category of manufacturing companies related to commodities such as the production of chemicals, building materials, glass, paper, and steel manufacturer.
The S&P/ASX 200 Real Estate
This is a company in the real estate sector classification group.
S&P/ASX 200 Resources
This is a company in the Energy or Metals & Mining industry classification.
S&P/ASX 200 Utilities
This is a group of companies in the classification of electric, gas, or water utilities, or companies that operate as independent electricity producers and/or distributors.
S&P ASX 200 index methodology
The methodology used for the S&P/ASX 200 uses the Global Industry Classification Standard (GICS®), which is used to measure companies globally. The method used is based on business activities.
The methodology used is by identifying the GICS classification and the GICS structure. The classification review process is to look at the largest source of revenue from the company. While in the GICS structure with several groups from 11 Sectors, 24 Industry Groups, 69 Industries, 158 Sub-Industry.
Is S&P ASX 200 A Good investment?
The S&P/ASX 200 is a benchmark for analyzing the average value of the 200 largest capitalized companies in Australia. The value of indices in general always goes up and down, so investors will also pay attention to this situation which is a risk of volatility.
The value of the S&P/ASX 200 in 2000 after launch at 3,133.3 and currently stands at 7,479.00 points. ASX 200’s performance in 20 years reaches 8.2% in 2021.
All investors can buy stock on the ASX exchange directly by selecting the company’s stock or investing in the S&P/ASX 200 in the ETF.
S&P/ASX 200 index ETF
ETFs are traded on the ASX just like common stocks. Usually, ETFs are for tracking benchmarks like indices, sectors, commodities, etc.
This is a great way to gain exposure to all components of the market through a single stock transaction.
The way ETFs work such as the SPDR S&P/ASX 200 Fund (STW) is an ETF product whose value mimics the performance of the S&P/ASX 200 index. This means that buying STW is similar to buying all 200 of its constituents in the same weight as the index.
The value movement on the S&P/ASX 200 is nearly identical to the STW Fund after deducting management fees. So, if an investor buys stock in STW, it is possible to see returns that are highly correlated with the S&P/ASX 200.
S&P/ASX 200 index futures
ASX SPI 200™ Futures is a benchmark derivative product that allows you to trade moves in the S&P/ASX 200 Index in one transaction.
US Commodity Futures Trading Commission (CFTC) and the UK Financial Services Authority (FSA) already approved ASX SPI 200™ Futures for trading.
These are Futures Contracts that refer to the S&P/ASX 200 Index. And consist of the S&P/ASX 100 plus an additional 100 shares listed on the Australian market.
An important feature for ASX SPI 200™ Futures is the day and night trading sessions for access almost 24 hours a day1. Both of these assets are available through international hubs include; London, Chicago, Singapore, and Hong Kong.
How do I invest in S&P ASX 200?
S&P/ASX 200 Indices to track 200 companies launched by the Australian Stock Exchange. How to invest indices is through ETFs. When someone buys the ASX 200 ETF. They are essentially buying a stock that tracks the performance of the ASX 200.
This is simpler than buying each constituent share in the ASX 200 and if interested can receive dividends.
The difference is if you invest directly in ASX 200, it means that you hold shares and have voting rights and receive dividends. Meanwhile, if you want to trade ASX 200 the possible way is through a CFD broker. The difference is that CFDs use leverage which allows you to get a higher contract value with lower funds. But this also increases the risk.
How the step
If you want to invest in ETFs. First, need to find a company that provides ETF trading and then create an account with them. That will facilitate investors to buy the ASX 200 ETF. It is also worth making sure that the broker supports the ASX 200 ETF.
Registering with your broker requires some documents for KYC. This is as a general rule to comply with Anti Money Laundering.
Currently, several many CFD brokers provide assets for ASX 200. If this is of interest. You can choose one of the CFD brokers and ask customer support for the availability of ASX 200 assets.
Product CFDs allow traders to trade assets without owning the asset, using the value or price of the underlying asset.
What is the difference between ASX and S&P?
S&P (Standard and poor)
S&P stands for Standard & Poor’s is a subsidiary of McGraw-Hill which is a stock and bond rating company. This is one of the 3 major companies in the securities rating industry with Moody’s and Fitch Ratings.
Standard & Poor’s has offices in 26 countries, with a wide range of investment products and benchmark stock market considerations.
S&P was founded under the name Standard Statistics Co. In 1923, Standard & Poor’s released its first stock market indicator, which then included 223 companies. The company’s name was changed to Standard & Poor’s in 1941 after the merger with Poor’s Publishing.
In 2016 McGraw-Hill Cos. bought S&P and renamed it S&P Global.
ASX (Australian Stock Exchange)
While ASX is the Australian Stock Exchange the main stock exchange in Australia owns ASX Limited. ASX found in 1861 as a private exchange and is the result of a merger between the Australian Stock Exchange and the Sydney Futures Exchange.
From the merger, it became the Australian Securities Exchange (ASX) on 5 December 2006. The ASX’s main stock market index is the S&P/ASX 200.
The S&P/ASX 200 is the main indices on the ASX exchange, which is Australia’s largest exchange. Become a benchmark of 200 companies from various industrial sectors in Australia with the largest capitalization.
Investors can invest in the S&P/ASX 200 with ETF or CFD trading through a broker that provides the underlying assets for the ASX 200.
Note: this article is for information only and is not investment advice or solicitation. Forex, CFD is a risky trade. Each investor is responsible for their investment.
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