Benchmark

The index a fund measures itself against

In detail

The benchmark is the index a fund names as its target or comparison. Index funds try to track it as closely as possible; active funds try to beat it. Whether a year was good is decided against the benchmark rather than by whether the fund rose, so the first thing to check is which index it measures itself by.

Example

Rising 3% in a year the benchmark rose 5% means the fund lost by 2 points.

Related terms

Index fund Active fund Tracking error

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For learning, not investment advice. Decisions are your own.