JDFP - Diversity by Design

Local Share Market

The local share marekt is called ASX, the main index used is the All Ords (ASX:XAO), the last five days of activity is shown in the image below.

There are more than 2,000 companies listed on the ASX and one of the ways they are categorised is by industry sector, this is a good method to illustrate the diversity of design principle we use at Jason Dawson Financial Planning (JDFP) as the image bellow shows the market capitalisation of the Australian ASX.

As you can see the local market is very heavy with banking (Financials) and mining (Resources) and therefore obtaining diversity in just the local market can be difficult.

The ASX is divided into the following sectors:

Consumer Discretionary: Companies from a broad range of industries such as media, general retailing and gambling. Examples include JB Hi Fi, Harvey Norman and Crown.

Consumer Staples: Companies involved in the production and distribution of food and beverages. Examples include Wesfarmers, Goodman Fielder and Woolworths.

Energy: Explorers and/or producers of energy resources such as oil, gas and renewable energies. Examples include Oil Search, Santos and Woodside Petroleum.

Financials: Banks, asset managers, insurance companies and other providers of financial services. Examples include Commonwealth Bank, Australian Securities Exchange and National Australia Bank.

Health Care: Pharmaceuticals, biotechnology, medical practice and pathology companies, as well as junior life sciences and medical device companies. Examples include CSL, Cochlear and Ramsay Health Care.

Industrials: Companies from a broad range of industries such as construction and engineering, infrastructure, transport and commercial services. Examples include Leighton Holdings, Transurban and Qantas.

Information Technology: A variety of mainly small to medium-sized businesses, such as IT consultancies and software developers and vendors. Examples include Computershare, IRESS Market Technology and carsales.com.

Materials: Producers of agricultural commodities, fertilisers, paper and forestry products, chemicals and building materials. Examples include Orica, Amcor and Incitec Pivot.

Metals/Mining: Many of the world's leading resource companies, along with a growing number of mid-tier producers and exploration companies. Examples include BHP Billiton, Rio Tinto and Fortescue Metals Group.

Telecommunications Services: Telecommunications carriers, distributors and resellers. Examples include Telecom of New Zealand, iiNet and Telstra.

Utilities: Major electricity and gas retailers and a number of smaller utility providers. Examples include AGL Energy, SP Ausnet and Spark Infrastructure.

Real Estate: Companies, investment trusts involved in deriving income solely from commercial, industrial and residential real estate (includes REITs). Examples include Mirvac, Stockland and Westfield.



For those interested the ASX does run a free seminar series for investors to meet and hear from senior management of ASX-listed companies across a variety of industries, check the current listed seminars and register your interest here.