Highlights:

ASX 100 includes leading Australian companies from diverse sectors.

The index reflects market movements based on company capitalisation.

Structural changes in the index can influence trading volumes across sectors.

The ASX 100 index represents the performance of the largest companies listed on the Australian Securities Exchange by market capitalisation. This index features a blend of companies from multiple sectors, including financials, resources, healthcare, and telecommunications. Constituents of the ASX 100 typically include dual-listed and multinational firms with broader market presence. The index is often used to reflect the core of the Australian equity landscape.

Composition and Sector Representation
Companies listed in the ASX 100 are selected based on their float-adjusted market capitalisation. This method ensures that only shares available for public trading are included in the weighting calculations. The index contains businesses from dominant sectors, such as banking, mining, and energy, along with representatives from the consumer, healthcare, and technology sectors.

Examples include banking institutions, diversified miners, telecommunications service providers, and large-cap industrial firms. Their scale and liquidity contribute to their inclusion, reinforcing the index as a primary benchmark for the broader Australian economy.

Index Movement and Periodic Rebalancing
The ASX 100 is reviewed regularly to ensure it remains representative of the evolving market. During these rebalancing periods, companies may be added or removed depending on their market performance and structural metrics. This may result in shifts in index weighting and changes in fund allocations.

Changes in company rankings based on market capitalisation can prompt updates to the index. These updates are designed to keep the index reflective of Australia's most influential listed companies. Companies that are included must meet eligibility criteria related to liquidity, float-adjusted market capitalisation, and trading history.

Role in the Broader Market Structure
The ASX 100 is one of several indexes designed to capture performance across different tiers of market capitalisation. It sits alongside others such as the ASX 200 and ASX 300. While the ASX 200 includes a wider range of mid-cap companies, the ASX 100 focuses on larger and more established entities. This positioning gives the index a unique role in reflecting the consolidated performance of high-impact companies in the Australian economy.

For funds that replicate index performance, inclusion in the ASX 100 often requires portfolio realignment to track changes. These index-related shifts can impact transaction volumes and visibility of certain stocks on the exchange.

Market Influence and Trading Trends
Companies listed in the ASX 100 typically experience a higher degree of institutional participation. These firms are frequently covered in research and may see more regular trading activity. Their presence in the index provides them with enhanced visibility in fund allocations, especially those aligned with benchmark tracking.

Trading behaviour surrounding the ASX 100 can reflect broader macroeconomic conditions, sector trends, and global developments. The performance of companies in this index is often observed closely for indications of underlying market trends.