The ASX Top 20 is a stock market index of the stocks listed in the Australian Securities Exchange from the Standard & Poor’s. It holds Australia’s 20 largest publicly traded corporations and is considered as Australia’s narrowest stock market index. The ASX 20 is highly liquid, actively traded and accounts for ~47% of Australia’s share market capitalization.
Similar to other ASX indices, the ASX top 20 is a market capitalization index, which means, all companies that are listed in the Australian Securities Exchange (ASX) are ranked by market capitalization. The top 20 ASX stocks that meet the minimum volume and benchmarks will then be eligible for inclusion in the index.
Rebalances are done on a quarterly basis, happening in March, June, September and December. In case an important event occurs, (e.g. merger, delisting, etc.) an intra-quarter rebalance may be conducted. The market will then be given a notice in a minimum of two business days.
The ASX top 20 companies have little diversification which only represent 8 GICS sectors. The Financials sector holds four out of the five largest companies and accounts for ~46% of the index.
Only 8 of the 11 GICS sectors are listed on the ASX top 20 index, namely, Financials (56.1%), Materials (11.3%), Consumer Staples (8.7%), Healthcare (6.8%), Telecommunication Services (5.7%), Industrials (4.4%), Real Estate (4.2), and Energy (2.8%).
Here are the ASX top 20 listed companies as of November 2017
Investing in the ASX top 20 is done through Exchange Traded Funds (ETFs). ETFs are managed funds that track a benchmark. They trade on the ASX like ordinary shares using a ticker code. The goal of an index fund is to replicate the performance of the underlying index with less fees and expenses.As of October 2016, the iShares S&P/ASX20 (ILC) is the only ETF that tracks the performance of the ASX top 20 index.