What is the ASX Emerging Companies Index?

Submitted by Share Trading on 9 March, 2010 - 17:15

The S&P/ASX Emerging Companies Index

The S&P/ASX Emerging Companies Index is the premier benchmark to measure the performance of microcap stocks in the Australian Markets. The ASX Emerging Companies Index has a stock ticker code of XEC. The index provides investors with a tool to effectively analyze characteristics of the microcap segment of the market.

The S&P/ASX Emerging Companies Index complements existing larger capitalisation indices in the S&P/ASX index suite by providing an investable performance benchmark for companies that generally rank outside the S&P/ASX 300 by total capitalisation. The S&P/ASX Emerging Companies Index provides an opportunity-set of companies characterised as being smaller, often less liquid and under-researched when compared with companies traded on ASX with larger capitalisations.

The methodology developed by S&P and ASX for this Index has been designed to be representative of companies typically found in the small and microcap sector and resulting portfolios. The methodology:

  • Selects companies that generally reside outside the S&P/ASX 300. Companies ranked between 350 and 600 by total capitalisation are eligible for inclusion with the maximum number of constituents capped at 200.
  • Rebalances semi-annually rather than quarterly to reduce index turnover and associated transaction costs.
  • Allows high performing companies to be held until they migrate into the S&P/ASX 300. Companies are excluded at rebalance when they rank above 300 or below 650 by total capitalisation
  • Accounts for the low liquidity often found in this sector while still ensuring that the benchmark portfolio represents a viable opportunity-set for fund managers.

More about

Download our FREE App

Signup for Free
Don't miss out on your free share trading articles.

Free Risk Money Management Calculator for those who sign up!