Define: Benchmark

A benchmark is a security or index against which the performance of other securities is judged. A benchmark is a goal to meet or to beat. Many investors use the S&P 500 Index as a benchmark for the US stock market. Their goal is for their investments to beat this benchmark. If their investments return more than the S&P 500 then the investor will have beaten the benchmark — if the investor’s efforts fall short then the investor will have failed to meet the benchmark. Investors may use any security or index as their benchmark. The theory is, if an investor’s efforts don’t at least equal the return provided by the benchmark, then the investor would be better off simply investing in the benchmark itself.

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Definitions for Benchmark are sourced/syndicated and enhanced from:

• A Dictionary of Economics (Oxford Quick Reference)
• BusinessDictionary.com
• Oxford Dictionary Of Accounting
• Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th February 2020.