All Ordinaries Index

The All Ordinaries Index (AOI) is a stock price index that keeps track of the 500 largest companies listed on the Australian Securities Exchange (ASX) based on their market capitalization. It is also known as All Ordinaries or All Ords.

The index consists of stocks of the most traded Australian companies. It is an example of a benchmark index for evaluating the performance of the Australian stock market. It illuminates the overall performance of the stock market, current trends in the context of the stock market, and how the stock market responds to events and different movements in the economy.

• The All Ordinaries Index, also known as All Ords, is a stock market index tracking the performance of the 500 largest companies listed on the Australian Securities Exchange (ASX) based on the company's market capitalization.
• It is an example of a benchmark index for assessing the performance of the Australian stock market.
• It sheds light on the stock market's overall performance since stocks from the most actively traded Australian corporations make up the index.
• All Ords is not a comprehensive picture of what the investors return because it does not account for any dividends that a company distributes.

The All Ordinaries Index (ticker symbol: XAO) is an example of a capitalization-weighted index. It focuses on the information based on the market capitalization values of companies. Focussing on market capitalization implies that several ASX firms' aggregate market value (AMV) is the foundation for All Odds. Market capitalization calculations involve multiplying the share price value by the total number of shares issued. In other words, the number of shares in circulation is multiplied by the current share price to specify a company's market value or market capitalization.

The stock market All Ordinaries Index is not a comprehensive picture of what investor returns because it does not account for any dividends that a company may pay to shareholders. But the All Ordinaries Total Return Index (XAOA), which considers all cash dividends reinvested on the ex-dividend date excluding the franking credit, may be used as a yardstick for the overall investor performance of the top 250 ASX-listed companies by market capitalization. The All Ordinaries Accumulation Index was the predecessor to the All Ordinaries Total Return Index.

A company must maintain an average turnover on the ASX of at least 0.5 percent of its quoted shares per month to be eligible for inclusion in the All Odds. In addition, a market value of at least 0.2 percent of all domestic equities listed on the ASX is also required. A large number of companies meet these above requirements. Therefore, larger companies' share price changes impact the All Odds more than smaller companies.

At the end of each month, the index portfolio adjustment is active to ensure the companies consistently match the requirements. Additionally, updates are made throughout the month as changes occur in the company in the form of delistings, additions, mergers and acquisitions, and capital reconstructions.

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The history of the All Ordinaries Index dates back to January 1980. It is the oldest index in Australia. The ASX All Ordinaries Index comprises around 500 companies on the stock exchange. The index's base value in the initial phase was 500. The restructuring of the index occurred in 2000 to include the 500 largest companies following market capitalization criteria. The introduction of new indices like new indices S&P/ASX 200 in 2000 has greatly reduced the significance of the All Ords. Furthermore, the index first experienced a record high of 7,956.30 on 5 January 2022.

Over three-quarters of Australia's share market is represented by the AOI components. A committee from Standard & Poor's (S&P) and the Australian Securities Exchange selects the members (ASX). The market capitalization threshold for a new entrance is $40 million. Since it includes all company sizes except micro-caps, investors place high importance on it. Until 2000, it served as Australia's main index for over 20 years. There aren't any Exchange Traded Funds (ETFs) that follow the performance of the All Ordinaries.

The chart of the All Ordinaries Index (^AORD) below consists of the data spanning from 1 November 1984 to 21 October 2022. The amount depicted is in AUD.

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