Although the Telstra (ASX: TLS) share price only gained 1.4% today it was the S&P/ASX 200's (ASX: XJO) leading share in terms of real points contribution to the index's performance today.
This is true even though the Telstra share price performance today was a long way behind (in percentage terms) market leaders such as Treasury Wine Estates Ltd (ASX: TWE), Costa Group (ASX: CGC) or Domino's Pizza Enterprises Ltd (ASX: DMP) that all climbed more than 2.8%.
This is because Telstra's large size or index weighting means it contributes much more than smaller companies to the overall performance of the index.
For example even though the index fell 20.7 points today, Telstra's positive share price performance alone actually contributed more than 2 positive index points, which is more than Costa or Domino's.
For mum and dad investors or professional fund managers in Australia whether or not you have exposure to the big bank stocks will play a large part in whether or not you outperform the index.
For example the big 4 banks including Commonwealth Bank of Australia (ASX: CBA) make up around a quarter of the index. Therefore if their share prices are rising and you don't own them you're likely to underperform, with vice versa true if the big banks are falling on the back of bad news such as The Royal Commission findings in 2018.
