ASX CEO Helen Lofthouse said: “The S&P/ASX 200 is the key benchmark index for Australian equities, providing a transparent, investable, and representative measure of the country’s largest and most liquid companies. It serves as a vital tool for investors and fund managers, helping track market trends and shape investment decisions.”

Lofthouse said the S&P/ASX 200 is part of everyday life in Australia. “From daily media reports that refer to the index, to superannuation funds that use the index to measure the performance of their domestic equities portfolios, the S&P/ASX 200 affects millions of Australians.”

The evolution of S&P/ASX indices over the past 25 years reflects ASX’s growth during that period, said Lofthouse. “The development of indices has been integral to ASX providing greater choice for investors and becoming a ‘one-stop shop’ for portfolio asset allocation across domestic and international markets.”

S&P Dow Jones Indices CEO Dan Draper said:  “As we celebrate the 25th anniversary of the S&P/ASX Index Series, we reflect on its profound impact in shaping the investment landscape in Australia and beyond. The Index Series has been foundational to the growth of index-based investing in Australia, serving as a reliable benchmark that enables investors to track market performance, generate insights and make informed decisions.

“Looking ahead, S&P DJI remains committed to strengthening its partnership with the ASX and continuing to develop a comprehensive suite of index tools that help market participants measure risks and opportunities in the ever-evolving financial markets.”

S&P Dow Jones Indices estimates that more than $360 billion of assets were invested in products indexed or benchmarked to S&P/ASX indices at December 2023.[i]

Thriving ecosystem of indices

On 3 April 2000, the S&P/ASX 200, S&P/ASX 300 and broader S&P/ASX Index Series launched in Australia.

Upon launch, the S&P/ASX 200’s value was just over $600 billion and the smallest ASX-listed company included in the index had a market capitalisation of $180 million.  The largest company in the index then was News Corporation.[ii]

Since then, the S&P/ASX 200’s combined value has grown by more than 341% to more than $2.7 trillion.[iii] ASX-listed companies now require an average six-month, float-adjusted market capitalisation of about $700 million to enter the index.[iv]

With thousands of ASX listings over the past 25 years, many new names have entered the S&P/ASX 200. Recent additions to the index include Guzman Y Gomez (ASX: GYG), the largest IPO in 2024, and Chemist Warehouse (through Sigma Healthcare - ASX: SIG) in 2025.

The chart below shows the change in company characteristics in the S&P/ASX 200 over the past 25 years.

Chart 1: S&P/ASX 200 company size (2000 to 2025) 

Today, dozens of S&P/ASX indices track a range of market segments, sectors, strategies and investment themes. Other well-known indices include the All Ordinaries Index and the S&P/ASX Small Ordinaries index.

Fixed interest indices also feature. S&P Dow Jones launched the S&P/ASX Fixed Interest Series in 2011 to measure the Australian bond market – a key development that made the bond market more accessible for retail investors.

Another highlight was the 2019 launch of S&P/ASX 200 ESG Index, which measures the performance of ASX-listed companies that meet certain Environmental, Social and Governance (ESG) criteria.

2020 saw the launch of the S&P/ASX All Technology Index. For the first time, investors had an index that measured the performance of the expanding technology sector on ASX – and it enabled the launch of an Australian technology ETF to track that index. 

The chart below summarises the introduction of S&P/ASX indices over the past 25 years, across and within asset classes. 

Chart 2: Chronology of S&P/ASX Index Series in Australia

Understanding indices 

Indices measure the performance of a group of securities.  The S&P/ASX 200, for example, tracks the performance of the 200 largest, index-eligible stocks on ASX,  weighted for their float-adjusted market capitalisation (shares available to public).

The S&P/ASX 200 also shows the weighting of stocks and sectors in the index. At 28 February 2025, the Commonwealth Bank of Australia (ASX: CBA) was the largest constituent in the S&P/ASX 200 by index weighting. Financials was the largest sector (33.8%), followed by Materials (18.8%).[v]

Index data also shows Australian sharemarket's return over short and long periods. The S&P/ASX 200's total return (including dividends) in calendar-year 2024 was 11.44%.[vi] Annualised over three yers, the index's total return was 9.24%.[vii]

On valuation, the S&P/ASX 200 has a projected Price Earnings (PE) ratio of 16.41 times and an indicated dividend yield of 3.79%.[viii] This and other information is freely available online through the monthly S&P/ASX 200 Fact Sheet.

Rebalancing is another feature of the S&P/ASX 200. The index’s composition changes every quarter as new companies are included and others excluded, based on changes in market value or corporate events, such as acquisitions or de-listings.

How investors use indices

The main role of indices is as a benchmarking or comparision tool. Consider a retail investor who achieved a 10% return on their Australian share portfolio after fees over one year. They’re happy with that double-digit return until they learn the S&P/ASX 200 returned 12% during that period. 

In market parlance, the investor ‘underperformed the market’. In this instance, they might have received a higher return by investing in an Exchange Traded Fund (ETF) that tracks the S&P/ASX 200 and aims to deliver a similar return.

Retail investors often focus on their portfolio’s absolute return. Professional investors, in contrast, typically focus on their portfolio’s relative return. That is, they compare their return from Australian equities over various periods to the S&P/ASX 200, which they refer to as their fund’s ‘benchmark index’. 

A retail investor who consistently underperformed the S&P/ASX 200 might decide to seek the index return through an ETF, cogniscent that they will receive the market return – positive or negative. 

If the S&P/ASX 200 fell 10% over a year, an ETF that tracks that index would deliver a similar negative return. Investors should always understand the features, benefits and risks of ETFs before investing in them. Like all funds, ETFs can potentially deliver negative returns. The ASX website has information on ETFs.

Indices are also used for portfolio construction. A professional investor in large-cap Australian shares could use the composition of the S&P/ASX 200 as a basis for stock and sector weightings in their portfolio, then adjust them according to their view on particular companies or sectors. 

For example, a fund manager’s portfolio might have a 7% weighting in a stock when its weighting in the S&P/ASX 200 index is 5%. Here, the manager is ‘overweight’ the stock because they view it bullishly. If they had a 3% portfolio weighting in that stock, the manager would be ‘underweight’ the stock. 

Consider a retail investor who owns Australian banks stocks that are worth half their portfolio’s total value. We mentioned earlier that the Financials sector has a 33% weighting in the S&P/ASX 200.[ix] In this instance, the retail investor has a larger weighting in banks compared to the market.

That could suit the investor if they are bullish on bank stocks. But it might also mean the investor’s equity portfolio is too concentrated in bank stocks. Understanding sector weightings through the S&P/ASX 200 could help the investor determine if they should rebalance their portfolio weightings. 

Index expansion supports growth in ETF market

A growing number of investors rely on indices through the ASX ETF market. The evolution of S&P/ASX indices across more market segments has enabled ETF issuers to launch more funds that track a wider range of indices.

The S&P/ASX Index Series is at the core of ASX’s ETF market. Domestic equity-focused ETFs quoted on ASX had assets of $58 billion at 31 December 2024, of which 62% ($37 billion) were based on S&P/ASX indices.[x]

Newer indices have enabled investors to target specific portfolio goals through ETFs. For example, the S&P Dividend Opportunities Index tracks a basket of securities that meet certain dividend criteria for income-focused investors.

The S&P/ASX 200 Low Volatility Index measures the performance of the 40 least volatile stocks in the top 200. Launched in 2017, the index is one of several S&P/ASX ‘factor’ indices that enable investors to gain exposure to stocks with certain characteristics, such as growth, value, momentum or volatility.

ETFs that track S&P/ASX indices have also aided asset allocation. Investors can add fixed interest exposure to their portfolio through index-tracking ETFs, or sector-specific exposure through indices that track sectors.

Increasingly, a stock’s inclusion or exclusion from a prominent index, such as the S&P/ASX 200, might potentially have implications for its short-term market value. Inclusion in the S&P/ASX 200 means ETFs that track that index have to buy the stock. Conversely, exclusions from that index means ETFs have to sell that stock. 

The potential for inclusion in an S&P index (depending on the security’s value) can be an attraction for companies considering an ASX listing through an Initial Public Offering (IPO). In some instances, index inclusion potentially means increased buying of a company’s shares due to the size and growth of index investing through ETFs worldwide. 

To learn more about S&P/ASX indices, visit Indices on the ASX website or read the education paper from S&P Dow Jones Indices on the 25th anniversary of S&P/ASX indices in Australia.

[i] S&P DJI 2023 Annual Survey of Assets, as of December 31, 2023. Indexed assets are assets in and/or notional value of institutional funds, ETFs, retail mutual funds, exchange-traded derivatives and other investable products that seek to replicate or capture the performance of the respective S&P DJI indices.

[ii] Source: S&P Dow Jones Indices LLC.  Data as of Feb. 28, 2025Since then, the S&P/ASX 200’s combined value has grown by more than 341% to more than $2.7 trillion.iii ASX-listed companies now require an average six-month, float-adjusted market capitalisation of about $700 million to enter the index.

[iii] S&P Dow Jones Indices LLC. ‘Celebrating a Quarter Century of S&P/ASX Indices’. Whitepaper. April 2025.

[iv] ibidThe chart below shows the change in company characteristics in the S&P/ASX 200 over the past 25 years.

[v] Source: S&P Global. S&P/ASX 200 Fact Sheet. February 2025.Index data also shows Australian sharemarket’s return over short and long periods. The S&P/ASX 200’s total return (including dividends) in calendar-year 2024 was 11.44%.vi Annualised over three years, the index’s total return was 9.24%.

[vi] ibid

[vii] Ibid. Returns to 28 February 2025

[viii] ibid

[ix] ibid

[x] S&P Dow Jones Indices LLC. ‘Celebrating a Quarter Century of S&P/ASX Indices’. Whitepaper. April 2025.