6 ASX shares including Ora Banda and Aussie Broadband ascend into ASX 200

Gold miner Ora Banda Mining Ltd (ASX: OBM) is one of six ASX shares set to join the S&P/ASX 200 Index (ASX: XJO) later this month.

S&P Dow Jones Indices announced its December quarter rebalance after the market closed on Friday.

Of the six companies joining the index, four are miners.

The others are fellow gold miners Pantoro Gold Ltd (ASX: PNR) and Resolute Mining Ltd (ASX: RSG), and Canadian uranium miner, Nexgen Energy Ltd (ASX: NXG).

Telecommunications share Aussie Broadband Ltd (ASX: ABB) will also ascend into the ASX 200 index.

Another business joining the ranks of Australia's top 200 listed companies is nuclear technology developer, Silex Systems Ltd (ASX: SLX).

What is an index rebalance?

The S&P Dow Jones Indices team reviews Australia's leading indices every quarter.

Rebalances ensure our indices accurately rank Australia's largest companies by market capitalisation.

Indices are important because they enable us to monitor and measure the market's performance.

The ASX 200 is the benchmark index for the Australian share market.

But other indices, like the S&P/ASX All Ordinaries Index (ASX: XAO) and S&P/ASX 300 Index (ASX: XKO), are also very important.

What does getting into the ASX 200 mean for a stock?

Gaining entry into the ASX 200 is a clear sign that a company is doing well and investors have confidence in its future.

Companies have to meet market capitalisation and liquidity requirements to make it into the ASX 200.

Getting into the ASX 200 can have a direct impact on the share price because it triggers a lot of passive investment.

Many exchange-traded funds (ETFs) and managed funds are designed to track the performance of the ASX 200.

This necessitates buying stocks when they enter the ASX 200, and selling stocks that are removed every quarter.

This often leads to extra trading activity around the rebalance date, which may influence a share's price.

Rebalances matter more than ever due to the growing number of Australians preferring to invest in ETFs over individual shares.

The latest Betashares data shows Australians invested a record $5.99 billion into ASX ETFs in October.

A record $321.7 billion in funds are invested across more than 400 ETFs on the market today.

ASX ETFs are a form of passive, diversified investment that many investors perceive as lower risk.

They are a basket of shares that investors can buy in one trade for a single brokerage fee, with low ongoing management fees thereafter.

This next rebalance will become effective on 22 December.

The post 6 ASX shares including Ora Banda and Aussie Broadband ascend into ASX 200 appeared first on The Motley Fool Australia.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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