All Ordinaries Index – All Ords (XAO) Overview & Price Forecast

The All Ordinaries Index (All Ords) is one of the most comprehensive and oldest indices on the Australian Securities Exchange (ASX).

Unlike the ASX 200, which focuses on the top 200 companies by market capitalisation, the All Ordinaries Index encompasses the largest 500 companies listed on the ASX, giving it a more extensive coverage across the entire market.

XAO Index Chart

The All Ords is often used as a benchmark for Australian equity market performance and as a tool for tracking the general health and trend of the Australian economy. Since it includes more companies than the ASX 200, it provides a more complete view of the market, encompassing both well-established firms and smaller, growth-oriented companies.

All Ords Price Forecast

Bull Argument: Vinay Ranjan, a Deputy Portfolio Manager at Airlie Funds Management, said in June that the bull case for Australian shares includes corporate balance sheets and earnings, and Australian competitiveness. The portfolio manager noted that “corporate balance sheets [are] in good shape” and that “Australia’s largest companies could be well placed to handle any adverse bumps the economic cycle, competitors or internal issues may throw at them.” In addition, Ranjan argues that “Australia’s place in the world [is] only getting better.” 

“Growth in employed persons translates directly into spending and this has provided a tailwind for Australia’s consumer-facing sectors despite cost-of-living pressures,” he added. “Total retail sales have increased by 30% over the last five years. According to Airlie, the looming tax cuts for individual workers in Australia in FY25 are likely to bolster retail spending and support those companies relying on the domestic consumer.”

Bear Argument: The current All Ordinaries bear case may see investors point to the country’s current economic situation, which remains subdued. To add to the economic worries, analysts have expressed concern about the potential impact of US tariffs on China and other countries following Donald Trump’s US election win. 

Micaela Fuchila, Jarden’s chief economist, reportedly cautioned that the anticipated move by the incoming Trump administration could trigger a new trade war, increasing the risks for Australia’s economy, as a Chinese manufacturing decline could reduce demand for Australian exports. Fuchila argues that US tariffs on Australian goods will have minimal impact on the trade relationship, but they may lower Australian GDP by 0.1 percentage points over a year.

What is the All Ordinaries Index?

Introduced in 1980, it is designed to represent the overall performance of the Australian equity market by tracking the share price movements of a broad selection of companies listed on the ASX. It provides a measure of the overall performance of the Australian equity market, covering companies across various sectors such as financials, healthcare, technology, materials, and consumer goods. For investors interested in a broader view of Australia’s economic landscape, the All Ordinaries Index offers a more extensive representation than narrower indices such as the S&P/ASX 200

The All Ordinaries Index is a market capitalisation-weighted index, meaning that companies with larger market capitalisations have a more significant impact on the index’s performance. The All Ords includes a broad spectrum of companies, from large-cap blue chips to smaller companies, providing investors with a representative view of the entire ASX market.

Who Should Buy All Ords?

The All Ords is an important benchmarking index in Australia, and is widely used as a gauge of market sentiment, and for a snapshot of the market’s direction.. Many index funds and ETFs use the All Ords as a benchmark or base for diversified funds, particularly for retail investors seeking exposure to the entire Australian market.

ETFs tracking the All Ordinaries Index offer an investment opportunity that appeals to a range of investors. However, investors should also ensure that the fund matches with their investing style and goals. Here are some characteristics best suited to investing in funds tracking the All Ordinaries.

Australian Market Enthusiasts: Of course, investors confident in the long-term growth of Australia’s economy and want broad exposure to companies listed on the ASX will find the All Ordinaries an attractive choice.

Sector Diversification: The All Ordinaries provides exposure to a mixture of sectors, offering diversification and reducing risks associated with investing in a single industry. However, it may also be more attractive to those with more of a focus on financial stocks, which make up around 30.9%. Materials is next at 20.5%.

Income-Oriented Investors: Many companies within the All Ordinaries Index offer strong dividend yields, making it appealing for investors looking for consistent income.

Risk Tolerance: While the index provides exposure to stable companies, it also bears risks tied to broader economic trends, requiring a moderate tolerance.

Timeframe: The All Ordinaries is well-suited for long-term investors with a strong belief in the sustained growth of the Australian economy.

All Ords Top 10 Companies 

The Australian Stock Exchange (ASX) announces changes to the All Ordinaries Index once a year, usually in March.

Major Sectors Represented

The index spans various sectors of the Australian economy, mirroring the country’s diverse market structure. Key sectors within the index include:

Financials: Includes the “Big Four” banks (Commonwealth Bank, Westpac, ANZ, NAB) and insurance providers.

Materials: Represents the mining and resources sector, with companies like BHP and Rio Tinto being significant contributors.

Healthcare: Contains leading biotech and healthcare companies, such as CSL Limited and Cochlear.

Energy: Includes energy giants like Woodside Petroleum and Santos.

Consumer Goods and Retail: Comprises major consumer-focused companies, including Woolworths and Wesfarmers.