What is Benchmark
Definition: A benchmark is an unmanaged group of securities which are considered as a 'benchmark' to measure a fund's/stock's performance. Benchmarks are generally broad market indices like BSE Sensex, CNX Nifty of the Indian stock market with which mutual fund returns are compared.
Description: If a fund returned 59% in a particular year, but the benchmark Sensex returned 70%, this infers the fund underperformed compared to the Sensex benchmark.
A benchmark indicates directly the fund manager's performance. For instance, a mutual fund which outperforms the benchmark is a sign of an efficient fund manager.
Also See: Fund Categories, Mutual Fund, Hedge Fund, ETF, Index Funds