What Is the All-Ordinaries Stock Index?
The All-Ordinaries ( or "Kangaroos" for slang) is a stock index comprised of common shares from the Australian Stock Exchange (ASX). The All-Ordinaries Index is the most quoted benchmark for Australian equities. The ASX is responsible for calculating and distributing the index and its returns.
- The All-Ordinaries (XAO) is the benchmark stock market index for Australian equities.
- Also known as the 'Kangaroos', the index is constructed and maintained by the Australian Stock Exchange (ASX).
- The index is comprised of the 500 most important publicly traded Australian corporations, and has been in existence since 1980.
Understanding the All-Ordinaries Stock Index
The All-Ordinaries Index is market weighted and includes about 500 companies. The All-Ordinaries Index started in January 1980, and is also known as the "All Ords." It is the oldest index of shares in Australia. The market capitalization of the companies included in the All Ords index amounts to over 95 percent of the value of all shares listed on the ASX. The 3-letter exchange ticker in Australia for the All Ordinaries is "XAO."
For a company to be included in the index, they must meet the requirements established by the ASX. The All Ords does not include the value of any dividends paid to shareholders and therefore does not reflect the total returns made from share market investments during that period. An index that takes into account both price movements and dividends is called an accumulation index. There is an All Ordinaries Accumulation Index, however this is not regularly quoted in the finance media.
When established, the All Ords had a base index of 500; this means that if the index is currently at 5000 points, the value of stocks in the All Ords has increased tenfold since January, 1980. On 3 April 2000, the All Ords was restructured to cover the 500 largest companies by market capitalization. This coincided with the introduction of new benchmark indices such as the S&P/ASX 200. The importance of the All Ords has been significantly decreased by these new indices.
All-Ordinaries Index Inclusion Requirements
To be included in the All-Ordinaries index, a company must have a market value of at least 0.2 percent of all domestic equities quoted on the ASX and must maintain an average turnover on the ASX of at least 0.5 percent of its quoted shares per month.
There are a diverse range of companies that satisfy this criteria, and their market values vary widely. This means that share price movements for companies with larger capitalizations have a larger effect on the All Ordinaries Index than do smaller companies.
The All Ordinaries Index portfolio is updated at the end of every month to ensure that the companies included continue to meet the criteria for inclusion. It is also updated throughout the month when there are changes in the portfolio companies, including delistings, additions and capital reconstructions.