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Benchmark

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Benchmark
The performance of a financial instrument used as a reference to compare the performances of similar instruments. To measure performance in this way you need a benchmark relative to an index.
    
A benchmark is something that the performance of something else can be compared to. For example, many mutual funds use the S&P 500 as a benchmark, either to beat or to track depending on whether they are an active or passive fund.
    
A standard against which the performance of a Security, Mutual Fund or investment manager can be measured.
    
For example, the NASDAQ may be used as a benchmark against which the performance of a technology stock is compared. Generally, broad market and market-segment stock and Bond indexes are used for this purpose.
    
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 the Lehman Brothers Aggregate Bond Index.
Posted by  marcus evans limited
 
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