All Ordinaries vs ASX 200
The All Ords and ASX 200 are great indicators of Australian equity performance, but both indexes have their weaknesses.
I like the All Ords because it tracks 500 companies (much like the S&P 500) and is also market cap weighted. So, while it does track some smaller companies that the ASX 200 doesn't, the market cap weighting gives it a similar pattern to its bigger brother.
The S&P/ASX 200 is managed by Standard and Poor's—meaning companies have to meet certain requirements before being included in the index. Consequently, providing the ASX 200 with 200 of the largest companies on the ASX—that meet certain liquidity and other performance related requirements.
Whereas, the All Ordinaries Index simply grabs the top 500 companies by market cap and compiles them into an index.