What Is a Benchmark Index?

There are two ways to compare the performance of funds. The first is a global comparison. All funds or the same group of funds are ranked together. The second is to compare the fund with a predetermined benchmark. This pre-determined benchmark is the fund's performance comparison benchmark. This comparison method measures the performance of the fund by defining an appropriate benchmark portfolio for the fund being evaluated and comparing the difference between the fund's return and the benchmark portfolio's yield. The benchmark portfolio is an investable, unmanaged portfolio with the same style as the fund. Performance comparison benchmark is an important criterion for investors to evaluate the performance of fund management companies.

Benchmark index

There are two ways to compare the performance of funds. The first is a global comparison. All funds or the same group of funds are ranked together. The second is to compare the fund with a predetermined benchmark. This pre-determined benchmark is the fund's performance comparison benchmark. This comparison method compares by defining an appropriate benchmark portfolio for the funds being evaluated.

Since 2002, regulators have required open-end funds to publish their performance comparison benchmarks when they are issued.

The Commercial Press's "English-Chinese Dictionary of Securities Investment" explains: benchmark index . name. The most basic and popular index reflecting the trading conditions of a stock exchange, such as the Dow Jones Industrial Average on the New York Stock Exchange and the Hang Seng Index on the Hong Kong Stock Exchange. This index is widely recognized by the market and widely used by the media.