Benchmark

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Benchmark

The performance of a predetermined set of securities, used for comparison purposes. Such sets may be based on published indexes or may be customized to suit an investment strategy.

Benchmark

A standard against which a security's performance is compared. A benchmark is usually an index of securities of the same or similar class. Stocks are usually compared against stocks; bonds against bonds, etc. Another type of benchmark considers securities according to industry: a telecommunications stock may be compared to other telecommunications stocks. Likewise, mid-cap securities may be benchmarked against other mid-cap securities. Some indices, such as the Dow Jones Industrial Average and the S&P 500, are considered to be benchmarks for the wider economy.

benchmark

A standard by which something is measured. For example, bond yields are generally compared to benchmark yields on U.S. Treasury securities of similar maturity. Mutual fund performance is often compared to changes in the Standard & Poor's 500 Stock Index.

Benchmark.

An investment benchmark is a standard against which the performance of an individual security or group of securities is measured.

For example, the average annual performance of a class of securities over time is a benchmark against which current performance of members of that class and the class itself is measured.

When the benchmark is an index tracking a specific segment of the market, the changing value of the index not only measures the strength or weakness of its segment but is the standard against which the performance of individual investments within the segment are measured.

For example, the Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA) are the most widely followed benchmarks, or indicators, of the US market for large-company stocks and the funds that invest in those stocks.

There are other indexes that serve as benchmarks for both broader and narrower segments of the US equities markets, of international markets, and of other types of investments such as bonds, mutual funds, and commodities.

Individual investors and financial professionals often gauge their market expectations and judge the performance of individual investments or market sectors against the appropriate benchmarks. In a somewhat different way, the changing yield on the 10-year US Treasury bond is considered a benchmark of investor attitudes.

For example, a lower yield is an indication that investors are putting money into bonds, driving up the price, possibly because they expect stock prices to drop. Conversely, a higher yield indicates investors are putting their money elsewhere.

Originally the term benchmark was a surveyor's mark indicating a specific height above sea level.

benchmark

A permanent reference mark,usually set in concrete or iron and used to establish the elevation above sea level or certain corners in a surveying system. All other measurements in the area should be checked for accuracy relative to the nearest benchmark, preferably against several nearby benchmarks to establish redundancy.

References in periodicals archive ?
benchmark index in their respective weightings in that benchmark index,
Sales Benchmark Index is differentiated through its use of empirical data, a repository of over 11,000 companies across 19 industries, 12 years of history and over 250 sales metrics.
In the opinion of the investment manager, the Lehman Brothers Municipal 1 - 15 Year Bond Index will provide a more effective benchmark index for the Fund.
Previously, the Fund's benchmark index had been the Lehman Brothers US Aggregate Index.
2 per cent as Saudi Arabia's benchmark index advanced 0.
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25% above its benchmark index and will complement INTECH's global strategy that launched in early 2006.
Summary: DUBAI - Qatar's benchmark index rose to the highest level in almost 11 months as oil crossed $100 a barrel and emerging-market stocks extended gains on optimism Asia will withstand Europe's debt crisis.
The Russell 2000 is a benchmark index for small-cap investments and is comprised of the stocks in the lower two-thirds of the Russell 3000.
Summary: DUBAI - Dubai's benchmark index retreated the most in more than a week amid speculation some companies may report slower Q4 earnings growth.
Property-related stocks fell and weighed on the benchmark index.