A benchmark is a standard against which the performance of a security, mutual fund or investment manager can be measured or judged. Benchmarks are created to include multiple securities representing some aspect of the total market. Broadly speaking, a benchmark is an index that serves as the measurement yardstick for a portfolio by comparing portfolio characteristics such as returns, risk, component weights and exposure to sectors, styles and other factors to the benchmark.

It is a point of reference from which measurements may be made. In investing circles, almost all benchmarks are indexes, although not all indexes are benchmarks. Active managers try to beat benchmarks while most ETFs track benchmarks.