The small resources share price index is exaggerating the investment performance of the sector stocks outside the ASX 100.  While the index remains the...

John Robertson

PortfolioDirect

The small resources share price index is exaggerating the investment performance of the sector stocks outside the ASX 100.  While the index remains the most representative of the available measures of resource sector performance in the Australian market, its construction methodology allows for less well performing constituent stocks to be benchmarked against industrial share price movements and potentially deleted if they do not measure up.  Consequently, the small resources share price index now comprises 50 stocks compared to 99 at the end of 2010.  Thirty seven stocks discarded in the past year had a median share price fall in the June quarter of 17% compared to the index gain of 1.6%.  The sector as a whole - approaching one thousand stocks - had a median loss of 13%.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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