benchmark

Generally, a market index that serves as a starting point for a portfolio manager to construct a portfolio and directs how the portfolio should be managed on an ongoing basis in terms of both risk and return. For individual investors, a benchmark allows them to gauge the relative performance of their portfolios. In most cases, investors choose a market index, or combination of indexes, to serve as the portfolio benchmark. An index tracks the performance of a broad asset class, such as all exchange-listed stocks, or a narrower slice of the market, such as technology stocks.