Australian Share Market Performance and Returns
Investing in Australia
Roger Nusbaum posted about increasing Australian exposure today (clearly he’s a smart guy ;-)). That reminded me I’m meant to be working on my Investing in Australia series. So let’s get cracking with all that’s bonzer, beaut, ace and corker with investing in Australia.
I’ll start with the big picture, the Australian Share Market since 1900. (Shares are stocks) Click for the full size PDF (2Mb).
The Australian Share Market or ASX for short has over 1700 listed companies. The ASX is the Australian Securities Exchange which is one of the world’s top 10 exchanges, measured by market capitalisation.
Some random stats on Australian Shares
For the ten years to December 2007 Australian shares returned 13.3% per annum. For the twenty year period the return was 12.5% p.a. Read more on those results.
Obviously the results for the last 10 and 20 years have not been as good.
Long term, over the 109 year history to 2007 the average return from the Price Index was 7.48% with the accumulation index, which includes dividends, providing a return of 12.42%.
There are numerous S&P ASX indicies. The best known are:
- All Ordinaries Index
ASX code: XAO
The All Ordinaries index is Australia’s premier market indicator. The index represents the 500 largest companies listed on the Australian Stock Exchange. Market capitalisation is the only eligibility requirement of constituents, as liquidity is not considered, with the exception of foreign domiciled companies.
- S&P/ASX 200 Index
ASX code: XJO
The S&P/ASX 200 index is recognised as the investable benchmark for the Australian equity market. It addresses the needs of investment managers to benchmark against a portfolio characterized by sufficient size and liquidity. The S&P/ASX 200 is comprised of the S&P/ASX 100 plus an additional 100 stocks. It forms the basis for the ASX mini200 futures contract, and the SPDR S&P/ASX 200 exchange-traded fund.
- S&P/ASX 20 Index
ASX code: XTL
The S&P/ASX 20 index is comprised of the 20 largest stocks by market capitalisation in Australia, emphasizing liquidity and investability. It is the narrowest index of the Standard & Poor’s Australian index family.
- S&P/ASX Index Methodology
- S&P/ASX 200 Constituents with price and market capitalisation The ASX200 represents 80% of the Australian share market by capitalisation.