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Investing Psychology

Difference Between the ASX 200 and the All-Ordinaries

Dominic Marino

Difference Between the ASX 200 and the All-Ordinaries

Market indexes are important to know and understand for any investor. Not only are they a safe way to generate modest returns, but they also provide insights into what the broader financial markets are doing.

“Do investors see current conditions positively? Or are they increasingly concerned about a certain future event?”

The difference between the ASX 200 and all ordinaries can be confusing – Let’s understand them better and break down the differences.

The ASX 200 Index

The ASX 200 (INDEXASX:XJO) is a subsector of the Australian Stock Exchange, where companies can list and raise money through investors by selling their shares, representative of ownership of that company. These investors can realise profits if the company increases in value, but also make losses if that company does not perform well.

Because there are over 2,000 public companies on the Australian stock exchange where investors can trade shares, this means there is a significant amount of variety. There are small companies and big companies, and firms with operations in different industries. The ASX200 aims to track the movements of only the largest 200 listed companies by market capitalisation and is used as a single reference point so investors can understand the general combined performance of those largest 200 firms.

The market capitalisation, or market cap, is calculated by multiplying the total number of company shares by the share price.

The ASX 200 value is determined on a weighted basis – Which means that the largest ASX companies have a bigger influence on the index’s performance. Given the Commonwealth Bank of Australia (ASX:CBA) has a market capitalisation of AUD$177.5bn, a 5% share price increase in CBA will have a larger net impact on the ASX200 index level than a 5% increase in shares of Breville (ASX:BRG), which only has a market capitalisation of AUD$4.1bn.

Because market capitalisation is determined by share price and outstanding shares, which both change frequently, the actual value of a company fluctuates. To ensure only the top 200 companies are included, the index undergoes a ‘quarterly’ rebalance in March, June, September, and December each year.

Despite the inclusion of 200 stocks, the general composition of the ASX is heavily concentrated – the largest 10 stocks accounted for 46% of the total index. 40% of the top 10 are Financial Institutions, whilst the financial sector accounts for 31.1% of the total ASX. Materials and mining also have strong influence, accounting for 17.2%.

The ASX 200 was created in April 2000 to replace the All ordinaries, and started at a value of 3,133.3 points, equal to the All-Ordinaries at the time. Since, it has grown 136.6% to 7413.7 (at time of writing). This growth is indicative of strong performance in Australia’s largest companies and is hence why the ASX 200 can be considered a proxy for the Australian economy and corporate conditions.

And what about The All-Ordinaries Index – Whats the difference?

The All-Ordinaries Index (“All Ords”, INDEXASX: XAO) was created in 1979 as Australia’s first share market index and primary institutional benchmark, representing the whole economy rather than individual regional indices. This makes it the oldest and most established index of shares in Australia.

Whilst the ASX 200 is a measurement of the performance of the top 200 stocks listed on the ASX, the All Ords is made up of the share prices for 500 of the largest ASX companies, based on market capitalisation. As it accounts for more companies, the All Ords represents close to 90% of the entire value of the ASX. Consequently, it provides a broader scope of assessment for the Australian stock market and accounts for smaller capitalisation companies to a greater degree. However, because of the market cap weighting process, the All Ords is still heavily influenced by large businesses listed on the ASX.

TickerCompanyMarket Capitalisation% Year Movement
CBACommonwealth Bank$177.5bn+50.87%
CSLCSL LTD$135.2m+0.11%
BHPBHP Group Ltd$110.5m+2.69%
NABNational Australia Bank Ltd$94.6m+48.48%
WBCWestpac Banking Corporation$94.1m+37.96%
ANZAustralia & NZ Banking Group$80.2m+44.51%
MQCMacquarie Group Ltd$73.1m+45.59%
WESWesfarmers Ltd$65.4m+22.48%
WOWWoolworths Group Ltd$48.8m+17.77%
TLSTelstra Corporation Ltd$44.6m+36.36%


Like the ASX 200, the All Ords doesn’t consider any dividends that company’s pass onto shareholders. Thus, the index does not capture the full level of investor returns. However, both indexes have alternative indexes that do account for all cash dividends reinvested on the ex-dividend date. The ASX 200’s is the “ASX 200 Total Net Return” (INDEXASX:XNT) and the All Ordinaries has the “All Ordinaries Total Return Index” (INDEXASX:XAOA).

A key difference between the two resides in their investment opportunities. In Australia, Exchange Traded Funds (ETF’s) like the iShares Core S&P/ASX 200 ETF can give investors exposure to the index and its steady growth, rather than having to purchase a select weighting of every single stock on the ASX 200, which would be difficult to manage and expensive in transaction costs. However, this exposure is not provided on the All Ords.

picture of money and notes

Why is the All Ords less investable?

A key concern is liquidity. Strong liquidity is highly beneficial and, in some cases, fundamental to a quality investment. Investors value liquidity because it allows them to enter and exit investments at the price they want. ETFs become more effective when they track and index that has large companies with high liquidity. Because the All Ords captures 500 stocks, it has exposure to companies of smaller the market cap, which have fewer buyers and sellers and thus, lower liquidity.

In terms of index specifics, Peet Limited (ASX:PPC) is a small cap that sits outside the ASX 200 but on the All Ords, with a market capitalisation of $524.38m. It has an average trading volume of 492,000 shares. Comparatively, ASX200 corporate giant Telstra (ASX:TLS) has an average trading volume of 21.9 million. Hence, its not efficient for an index fund to track hundreds of companies outside of the ASX200. If an index fund were to cover small stocks, it would suffer from liquidity issues (such as dramatic share price movements) that would decrease its effectiveness to track an underlying benchmark.  

Moreover, some super funds due to capital preservation mandates, are only limited to investing in ASX 200 stocks, whilst other funds use ETF’s for ASX 200 exposure. Thus, falling out of the ASX 200 and into the All Ords can lead to companies losing a share of $1tn in super fund investment.

All Ords against the S&P/ASX 200 – Both indexes follow very similar growth patterns, indicative of the small influence of small capitalisation stocks on general index movements. Because both indexes capture the top 200 ASX listed companies, they are influenced by the same major catalysts. (Source: S&P Global)

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