ASX 200 Index

The ASX 200 Index follows the price of the 200 largest companies listed on the Australian Stock Exchange by market capitalisation (the total value of the shares of that company actively traded in the market).

The ASX 200 is a popular index with traders and investors in Australia. The Australian economy has benefited from global demand for natural resources, particularly in Asia. In some respects, the index is a benchmark of the performance of mining shares and the relative health of the global mining industry in general.

The ASX 200 includes many leading Australian companies, like Foster’s Group, Macquarie and Qantas. However, it has a strong bias towards mining companies, partly because BHP Billiton and Rio Tinto, two of the biggest mining companies in the world, are components, and partly because Australia’s strong mining industry has produced a large number of companies in the resources sector.

Apart from the mining sector, the ASX is also heavily laden with financial services companies, and some of its biggest constituents are banks like Commonwealth Bank of Australia and WestPac Banking Corporation.

To be included in the index, a company must be listed on the Australian Stock Exchange (ASX) and must meet a basic liquidity requirement: a minimum amount of its shares must be changing hands on a regular basis. Only shares that are freely available – those not controlled by governments, private equity funds, directors or company founders – count towards the total market capitalisation.

You can invest in or trade the ASX 200 in a number of different ways. Here are some of the most popular.

• Exchange Traded Funds
• Contracts for Difference or Spread Betting
• Futures & Options

Exchange Traded Funds

Exchange Traded Funds are a cheap and easy way of tracking the performance of the Aussie index. Exchange Traded Funds can be invested in like stocks and shares and can be found on many of the best investing platforms.

• Find out more about Exchange Traded Funds
• Compare platforms for Exchange Traded Funds

Contract for Differences

Contract for Differences are leveraged products which means they involve greater risk. While there is an opportunity to increase your profits, there is also the chance of greater losses. The ASX 200 is often called the AUS200 on CFD trading platforms.

• Read our Contract for Differences beginner’s guide
• Find CFD brokers

If you are based in the UK, spread betting is a tax free alternative to Contract for Differences. You can find our list of spread betting brokers here to get you started.

Futures

Futures and options are contracts that enable traders to buy or sell the ASX 200 index at a predetermined price on a future date, Our Partner, CME Group has a range of futures products based on the price of the ASX 200, and traders can open an account with an approved broker to trade CME Group futures.

• Read our beginner’s guide to Futures
• Find out more about Options
• Take our free online Equities Indices Trading Course