"Perhaps the point of this is that in the equity market we have, with its high concentration of large banks and large miners, investing in “the index” may not make as much sense as it does elsewhere. If your local index happens to be well diversified and stocked with a wide range of world-class enterprises, then by all means invest in it. In Australia, perhaps a more thoughtful approach is warranted."
From Roger Montgomery's website - http://rogermontgomery.com/a-good-year-for-active-fund-managers-2/
In this article the writer is obviously hinting at using a managed fund, i.e. Montgomery Fund, but that website has had some quite educational material on it in the past for me and I found the article compelling.
The risk of the huge skewing of our index towards the top ten stocks has been shown recently with BHP going downhill along with WOW and a few others. However the higher dividends of Australian shares and attached franking credits are an obvious positive. If it wasn't for those, I'd consider having a "reverse-home bias" and investing a much greater amount in the Vanguard World Ex-Australia ETFs, probably choosing the hedged version if I had very little Australian share exposure.
MVW seems to address this problem nicely, and my interest in it is still very much there, however the lack of liquidity troubles me a little.
What do people think about investing in the ASX as an index, considering it's pretty much gone nowhere this year?