What is a benchmark index?

Benchmark Index is a standard reference point that is used to compare the results of similar investments over time. Investors can use a benchmark index to analyze individual earnings or institutional investment portfolio. Different indices can be used to measure portfolio earnings of shares, bonds and commodities. This index monitors the performance of 500 active shares of the company with large capital in the United States. Generally, the investor of the shares is to have a portfolio and defeat the S & P® 500. Companies included in the Dow Jones industrial average are generally the largest and most important companies in the United States. According to the Dow Jones website, the industrial average Dow Jones is the most quoted benchmark index in newspapers, television and on the Internet.

Bond investors also use reference indices to review their results. The Aggregated Bond Index Lehman Brothers is a popular Bond Benchmark index. This includes fixed -rate bonds, investment class. The types of bonds included in the Lehman Brother bonds include the Ministry of Finance, Government, Mortgage and Corporate Bonds.

Indices are also available that focus on stocks in specific industries. It can provide insight on how the overall market sector works. Industrial sectors, which are commonly monitored separately according to various index transport, utilities and retail.

commodities are also used by indexes to measure their results. The GSCI index S & P® GSCI monitors 24 different raw material prices. These materials include oil, natural gas, cattle, sugar, coffee and other heavily used ingredients.

Benchmark Indexes have in the connectiona long history. The S & P® 500 began in 1957. The industrial average Dow Jones, created in 1896, is now over 100 years old. With his 1986 debut, the Lehman Brothers Agregate Bond Index is relatively new. While investors cannot invest directly in the index, many financial institutions have created mutual funds that mimic indices. For example