The ASX 300 Index

The ASX 300 Index

The ASX 300 Index (short for Australian Securities Exchange) provides exposure to large, mid and small-cap stocks in Australia. It consists of all the companies in the ASX 200 along with 100 companies that have a smaller capitalization of more than 100 million Australian dollars. The market capitalizations combined sums up to around 85 percent of Australia’s share market as of March of 2017. 

The ASX 300 is used regularly by investors as a point of reference for superannuation portfolios and managed funds because it also hosts smaller companies. 

A Brief Intro to the ASX 

The Australian Securities Exchange, or ASX, is the primary exchange for securities in Australia that is owned by the Australian Securities Exchange Ltd. 

The ASX has an average turnover of 4.685 billion Australian dollars every day and has a market capitalization of about 1.6 trillion Australian dollars which is enough for it to be included in the world’s top 15 listed exchange groups along with the likes of NYSE, NASDAQ and Euronext. 

Company Selection 

Companies go through a selection process facilitated by a committee from Standard and Poor’s and the Australian Securities Exchange. 

The ASX 300 is a float-adjusted market cap weighted index so companies are sorted according to its market cap. Exchange traded funds and Listed Investment Companies are ignored. The top 300 stocks in the Australian Securities Exchange that meet the committee’s qualifications become eligible to be included in the index. 

Twice a year, the committee conducts rebalances and sometimes whenever a major event occurs such as mergers, an intra-quarter removal may be done. In the event that a company is delisted from the index, a replacement will not be added until the next rebalance date which are in March and September. 

Sectors in the Index 

The ASX 300 uses the Global Industry Classification Standard to sort companies by the nature of their business. 

As of July 2017, constituents of the index are comprised of the following: 

  • Financials: 34.2%
  • Materials: 16.0%
  • Real Estate: 8.2%
  • Industrials: 8.1%
  • Healthcare: 8.0%
  • Consumer Staples: 6.8%
  • Consumer Discretionary: 6.2
  • Energy: 4.5%
  • Telecommunication Services: 4.1%
  • Utilities: 2.3%
  • Information Technology: 1.6% 

Exchange Traded Funds 

Exchange Traded Funds are a type of managed funds that track a benchmark, commodity or bonds. They are traded on the index just like regular shares using their ticker code. An index fund’s aim is to be as close to the performance of the underlying index as possible while offering less fees.