The phrase “All Ords” may be familiar to you if you’ve ever glanced at Australian financial news or watched the evening business program. However, what does it actually mean? Why should the typical Australian give a damn?
What is the All Ords?
“All Ords” is short for the All Ordinaries Index, and it’s one of the most widely recognized stock market indices in Australia. Essentially, it represents the performance of the largest publicly listed companies on the Australian Securities Exchange (ASX).
Think of it like a health check for the broader Australian share market. If the All Ords is up, it generally means that most of Australia’s top companies are performing well. If it’s down, it suggests they’re not doing so great.
A Bit of History
The All Ordinaries was established in 1980 and originally included 500 of the largest companies on the ASX. Over time, the composition has changed slightly, but it still includes a broad cross-section of the Australian economy.
It’s not a weighted average of every company, but it does aim to give a general idea of market trends and investor confidence across the largest players.
How is it Different from the ASX 200?
While both the All Ords and the ASX 200 are stock market indices, the key difference lies in which companies they include:
- All Ords: Includes the top ~500 companies on the ASX by market capitalisation.
- ASX 200: Includes only the top 200, often considered a more focused and accurate representation of the Australian economy’s movers and shakers.
So while the ASX 200 gets a bit more media attention these days due to its tighter focus, the All Ords still provides valuable insight into broader market trends.
Why It Matters
Whether you’re a casual investor or just trying to make sense of the nightly news, keeping an eye on the All Ords can help you:
- Gauge market sentiment: Is the overall market feeling optimistic or pessimistic?
- Track investment performance: Many Australian superannuation funds are invested in companies listed on the ASX, so shifts in the All Ords can indirectly impact your retirement savings.
- Understand the economy: The index often moves based on expectations around inflation, interest rates, and global events, so it’s a handy way to stay tuned in to economic trends.