Benchmark

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DEFINITION of 'Benchmark'

A standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.

INVESTOPEDIA EXPLAINS 'Benchmark'

When evaluating the performance of any investment, it's important to compare it against an appropriate benchmark. In the financial field, there are dozens of indexes that analysts use to gauge the performance of any given investment including the S&P 500, the Dow Jones Industrial Average, the Russell 2000 Index and even competitor fund.

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    The number of possible benchmarks that investors or analysts can choose from is extensive, especially for a sector as large ... Read Full Answer >>
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