Since its debut in April 2000, the S&P/ASX Index series has helped to define the Australian equity market. As Australia’s most widely followed market indicator, the S&P/ASX 200 serves as the de-facto measure of the value and performance of the nation’s stock market. In a literal sense, market peaks and valleys are defined by the level of the S&P/ASX 200.
Highlights from 20 Years of the S&P/ASX 200
S&P/ASX Indices by the Numbers
Beyond the headline S&P/ASX 200, the S&P/ASX index series plays an integral role in Australia’s investment infrastructure. In fact, in the fund management industry, the S&P/ASX 200 and other S&P/ASX indices serve as the investable universe for actively managed strategies and as ways to benchmark active fund performance. Asset owners, such as superannuation funds, use the S&P/ASX indices to benchmark their domestic portfolios.
With an estimated AUD 309 billion1 of Australian equity funds benchmarked to S&P/ASX indices, the series represents, by far, the most widely used benchmarks for Australian investment funds.1 Source: S&P Dow Jones Indices; Morningstar; Evestment. Data as of 12/31/2018.
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Capturing the Growth of the Australian Technology Industry
Launched in February 2020, the S&P/ASX All Technology Index cuts across multiple technology-related GICS categories to capture the rapidly growing set of ASX-listed technology companies.
What’s Driving the Continued Growth of Index Investing in Australia?
The shift to passive investing has been driven, in part, by the frequent inability of active managers to outperform their benchmark over the past two decades. The S&P Indices Versus Active (SPIVA®) Scorecard, published semi-annually, measures the performance of actively managed funds against their relevant benchmark in Australian equities, international equities, Australian REITs, and Australian bonds.
S&P DJI’s annual Australian Persistence Scorecards also provide evidence that for top-performning active funds, it’s hard to stay at the top. According to the most recent report, as of June 2019, only 1.3% of actively managed Australian general equity funds that were in the top quartile of performance in June 2014 were able to maintain their position fiver years later. In the Australian equity general fund category, only 0.6% outperformed the S&P/ASX 200 for five consecutive years.
The Adoption of Index Investing in Australia is Fueling Market Liquidity
The S&P/ASX index series has played a large role in driving the growth of index investing in Australia. Today, approximately 24% of Australian domestic equity funds under management are invested through index-tracking vehicles.2 A wide range of indices and associated products have been developed to track size and sector segments of the Australian market, and other investment themes and strategies. Including products such as index funds and institutionally managed passive portfolios, S&P DJI estimates that there is approximately AUD 50 billion in assets tracking the various S&P/ASX indices.3 ETFs have proven particularly popular; as of December 2019, domestic equity-focused ETFs listed in Australia had attracted AUD 21.9 billion in investments, of which 68% (AUD 14.7 billion)4 was tied to products based on the S&P/ASX index series.
2 Rainmaker Information. Data as of Sep 30, 2019.
3 Source: S&P Dow Jones Indices. Data as of Dec 31, 2019. Includes enhanced index products.
4 Sources: ASX Investment Products Monthly Update, as of December 2019. Figures include domestic equity and property ETFs.
The S&P/ASX Ecosystem
As indexed assets have grown, we’ve witnessed the growth of a vibrant ecosystem of index-linked trading vehicles. An investor who wants S&P/ASX index exposure can get it through a range of instruments, including ETFs, options, or futures. Products linked to sectors the S&P/ASX 200 represent one section of this ecosystem, with a cumulative traded value of approximately AUD 5 billion in 2019.
With trillions of dollars in reported annual volumes, the S&P/ASX index series offers a deep ecosystem of liquid, tradable products available to support investors as they enter, and exit, the markets. Although the S&P/ASX 200 stands out in particular for its associated liquidity, other S&P/ASX indices have benefited from their connections to the ecosystem.
Source: S&P Dow Jones Indices LLC, FIA, Bloomberg. Data from the 12-month-period ending December 31, 2019. Chart is provided for illustrative purposes.
S&P DJI and the Australian Securities Exchange (ASX) together provide a complete range of Australian market benchmarks.
Operating at the heart of the deep and liquid Australian financial markets, ASX has a proud history as an early and successful adopter of new technology. The exchange continues to focus on embracing innovative solutions for ease of the customer, helping companies grow, creating value for shareholders, and supporting the Australian economy. ASX is an integrated exchange offering listings, trading, clearing, settlement, technical and information services, and other post-trade services.
S&P/ASX Indices and the Growth of Index Investing
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