Difference between revisions of "Benchmark"

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Benchmarks are average or standard measurements of the performance of an investment market or asset class. They usually serve as a base for comparing the performance of an individual holding against the benchmark overall market performance.<ref>{{cite web|url=http://www.pathtoinvesting.org/experts/manage_stock/manage_061.htm
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Benchmarks are average or standard measurements of the performance of an investment market or [[asset]] class. They usually serve as a base for comparing the performance of an individual holding against the benchmark overall market performance.<ref>{{cite web|url=http://www.pathtoinvesting.org/experts/manage_stock/manage_061.htm
|name=About Us|org=Path to Investing|date=April 14, 2008}}</ref>
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|name=Market Benchmarks|org=Path to Investing|date=April 14, 2008}}</ref>
 
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==Kinds of benchmarks==  
 
==Kinds of benchmarks==  
  
===[[Stock index]]===
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===Stock Index===
 
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National [[stock]] market indexes like America's [[Dow Jones Industrial Average]], Japan's [[Nikkei 225]] or Germany's [[DAX]] are the best known and most widely used benchmarks for equity investors. But sector-based indexes like the [[small cap]] [[Russell 2000 Index]] and the [[NASDAQ Biotechnology Index]] are growing in popularity, while global-market investors prefer [[Morgan Stanley]] Capital International's three-continent [[EAFE Index]].
National stock-market indexes like America's [[Dow Jones Industrial Average]], Japan's [[Nikkei 225]] or Germany's [[DAX]] are the best known and most widely used benchmarks for equity investors. But sector-based indexes like the small-cap [[Russell 2000 Index]] and the [[NASDAQ Biotechnology Index]] are growing in popularity, while global-market investors prefer [[Morgan Stanley]] Capital International's three-continent [[EAFE Index]].
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===Bond index===
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Bond markets also employ different indexes as benchmarks for different markets and sectors. The widely-used [[Lehman Brothers]] [[Aggregate Bond Index]], an accumulation of several bond market indexes, forms a traditional benchmark for bond funds<ref>{{cite web|url=http://www.axaonline.com/rs/3p/sp/5056.html#what|name=About Us|org=AXA Online|date=April 14, 2008}}</ref>. Yields on 10-year U.S. Treasury [[bonds]] are considered one of the strongest benchmarks for long-term bond  performances.
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===Economic indicator===
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===Bond Index===
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[[Bond]] markets also employ different indexes as benchmarks for different markets and sectors. The widely-used [[Lehman Brothers]] [[Aggregate Bond Index]], an accumulation of several bond market indexes, forms a traditional benchmark for bond funds.<ref>{{cite web|url=http://www.axaonline.com/rs/3p/sp/5056.html#what|name=Benchmarks|org=AXA Online|date=April 14, 2008}}</ref> Yields on 10-year U.S. Treasury [[bonds]] are considered one of the strongest benchmarks for long-term bond  performances.
  
Some investors look beyond the markets themselves to the broader national or international economic outlook for performance guages. [[Short-term interest rates]] are probably the most commonly-employed indicator benchmark but quarterly employment, productivity and GDP numbers are all valued by traders and investors as 'reality check' benchmarks.
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===Economic Indicator===
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Some investors look beyond the markets themselves to the broader national or international economic outlook for performance gauges. [[Short-term interest rates]] are probably the most commonly-employed indicator benchmark but quarterly employment, productivity and [[GDP]] numbers are all valued by traders and investors as 'reality check' benchmarks.
  
 
== References ==
 
== References ==
 
<references />
 
<references />
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[[Category:Definitions]]

Latest revision as of 05:44, 3 July 2012

Marquette Partners.jpg

Benchmarks are average or standard measurements of the performance of an investment market or asset class. They usually serve as a base for comparing the performance of an individual holding against the benchmark overall market performance.[1]

Kinds of benchmarks

Stock Index

National stock market indexes like America's Dow Jones Industrial Average, Japan's Nikkei 225 or Germany's DAX are the best known and most widely used benchmarks for equity investors. But sector-based indexes like the small cap Russell 2000 Index and the NASDAQ Biotechnology Index are growing in popularity, while global-market investors prefer Morgan Stanley Capital International's three-continent EAFE Index.

Bond Index

Bond markets also employ different indexes as benchmarks for different markets and sectors. The widely-used Lehman Brothers Aggregate Bond Index, an accumulation of several bond market indexes, forms a traditional benchmark for bond funds.[2] Yields on 10-year U.S. Treasury bonds are considered one of the strongest benchmarks for long-term bond performances.

Economic Indicator

Some investors look beyond the markets themselves to the broader national or international economic outlook for performance gauges. Short-term interest rates are probably the most commonly-employed indicator benchmark but quarterly employment, productivity and GDP numbers are all valued by traders and investors as 'reality check' benchmarks.

References

  1. Market Benchmarks. Path to Investing.
  2. Benchmarks. AXA Online.