Wed 30th May, 2012

INDEXES TRADING

The S&P/ASX 200 is recognised as the primary investable benchmark in Australia. The index covers approximately 78% of Australian equity market capitalisation. Index constituents are drawn from eligible companies listed on the Australian Stock Exchange.

This index is designed to address investment managers’ needs to benchmark against a portfolio characterised by sufficient size and liquidity.

How are companies classified as a particular stock index?

The GICS (Global Industry Classification Standard) is a joint S&P/Morgan Stanley Capital International product aimed at standardising industry definitions. To bring Australia in line with the rest of the world, S&P have reclassified all ASX listed entities according to the GICS. From 1 July 2002, the ASX industry classifications became redundant.

The Australian market has traditionally been associated with 24 industry sectors unique to the country. The GICS consists of 10 Sectors, aggregated from 24 Industry Groups, 67 Industries and 147 Sub-Industries currently covering over 27 000 companies globally.

The standardised classification system has the advantage that it encourages foreign investors to look into local markets, as well as allowing local investors to look at the rest of the world and compare stocks via industry classification. This approach contributes to the transparency and efficiency of the investment process.

Specialised indexes exist to track the performance of specific sectors in the market, such as the Energy industry or the Information Technology sector. We have compiled a comprehensive section on these 10 Sectors, as defined by the GICS, as well as information on Index Trades, and Indexes Traders Log and Index Exits.

For more information on the indexes we cover, just click on the links below. Or, for instant access to our Stock Index section, simply sign up for a free trial today!


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