Benchmark
InvestingDefinition
The reference portfolio against which an investment's performance is measured. Choice of benchmark matters enormously: a small-cap fund beating the S&P 500 may simply reflect small-cap factor exposure, not skill.
Common benchmarks: S&P 500 (US large-cap), Russell 2000 (US small-cap), MSCI EAFE (developed international), MSCI EM (emerging), Bloomberg Aggregate (US bonds), 60/40 portfolio (multi-asset).
Common benchmarks: S&P 500 (US large-cap), Russell 2000 (US small-cap), MSCI EAFE (developed international), MSCI EM (emerging), Bloomberg Aggregate (US bonds), 60/40 portfolio (multi-asset).