How to Invest in ASX 200

Roberto Rivero

The ASX 200 index is one of the major stock indices composed of companies listed on the Australian Securities Exchange. In this article, we will explain what the ASX 200 index is, highlight its top constituents, explain how to invest in ASX 200 and much more!

What Is the ASX 200?

The S&P/ASX 200 Index, usually simplified to ASX 200, is a stock index composed of the 200 largest stocks listed on the Australian Securities Exchange (ASX).

Although there are around 2,100 companies listed on the ASX, the components of the ASX 200 index account for more than 80% of the total stock market capitalisation. Consequently, the index is widely considered to be a reliable benchmark for the wider Australian stock market.

Top ASX 200 Companies by Market Cap

The ASX 200 is a market capitalisation weighted index meaning that, the larger a component’s market cap, the larger its weighting within the index.

This means that companies with a larger market capitalisation will have more of an influence over the index than companies with a smaller market capitalisation. Consequently, it is a good idea to familiarise yourself with the top ASX 200 companies by market cap, as they can play a big role in the performance of the overall index.

The table below shows the top ten constituents of the ASX 200 by weight. Between them, they account for almost 50% of the entire index.

Top Weighted ASX 200 Constituents
BHP Group Ltd
Commonwealth Bank Australia
National Australia Bank Ltd
Westpac Banking Corp
ANZ Group Holdings Ltd
Macquarie Group Ltd
Wesfarmers Ltd
Woodside Energy Group Ltd
Rio Tinto Ltd

Data as of 30 November 2023.

Investing in ASX 200 Index

As with any stock index, it is not possible to invest in the ASX 200 directly. However, there are many options available for those considering investing in the ASX 200.

In order to gain exposure to the entire index, you might choose to invest in an Exchange-Traded Fund (ETF) which passively tracks the index. An ETF is able to track the ASX 200 by using a pool of investor money to buy shares in all the companies listed within the index. Consequently, it is possible to gain exposure to the entire ASX 200 index through a single investment.

Alternatively, if you are not interested in gaining exposure to the entire index, another option is to construct a portfolio composed of the specific ASX 200 companies you are most interested in.

What Is the Best ASX 200 ETF?

There are a number of ETFs which are designed to track the ASX 200 index available to invest in.

Because each ASX 200 ETF replicates the same underlying index by buying shares in all the component companies, any difference in performance tends to be minimal.

Therefore, what constitutes the best ASX 200 ETF is fairly subjective and will depend on each individual investor. A couple of important things to consider are annual fees and the reputation of the fund’s provider.

At Admirals, we offer our clients the ability to invest in the Lyxor S&P / ASX 200 UCITS ETF. In the table below, we have highlighted some of the key information regarding this ASX 200 ETF, as well as its historical performance.

Lyxor S&P / ASX 200 UCITS ETF
Ongoing Fee Distribution Yield 1-Year Performance 3-Year Performance 5-Year Performance 10-Year Performance
0.40% 3.48% 6.75% 26.69% 61.39% 91.34%

Data as of 25 December 2023.

How to Trade ASX 200

For those more interested in trading the ASX 200 over a short time period, Contracts for Difference (CFDs) may be an option to consider.

CFDs allow traders to attempt to profit from both rising and falling prices, as well as benefitting from the use of leverage, which allows traders to open larger position sizes with a smaller initial deposit.

Accordingly, leverage can magnify a trader’s potential gains. However, it has exactly the same magnifying effect on losses, which means it must be used with extreme caution.

With Admirals, clients can trade CFDs on a wide variety of instruments, including a number of stock indices such as the ASX 200.

How to Invest in ASX 200 ETF

With an Invest.MT5 account from Admirals, you can buy shares in an ASX 200 ETF, as well as more than 200 other ETFs. In order to learn how to invest in ASX 200, follow these steps:

  1. Open an Invest.MT5 account.
  2. Log in to the Dashboard.
  3. Open the MetaTrader web trading terminal.
  4. Search for the ASX 200 ETF and click the symbol to open a price chart.
  5. Press ‘Create New Order’, enter the number of shares you wish to purchase and hit ‘Buy’!
Depicted: Admirals MetaTrader WebTrader – Lyxor Australia S&P / ASX 200 UCITs ETF Chart. Date Captured: 18 December 2023. Past performance is not a reliable indicator of future results.

Investing with Admirals

An Invest.MT5 account from Admirals allows investors to buy shares in more than 4,500 companies and over 200 Exchange-Traded Funds (ETFs) from around the world. Click the banner below to register for an account today:

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What is the difference between ASX 200 and ASX 300?

Whereas the ASX 200 tracks the 200 largest companies listed on the Australian Securities Exchange (ASX), the ASX 300 tracks the 300 largest companies. Consequently, the ASX 300 is composed of every company within the ASX 200 plus the next 100 largest companies on the ASX.

Is there an ETF that tracks ASX 200?

Yes, there are a number of ETFs which are designed specifically to track the ASX 200. These include the iShares Core S&P/ASX 200 ETF and the Lyxor Australia S&P/ASX 200 ETF.

About Admirals 

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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