Benchmark index

A benchmark index is a collection of selected stocks or assets that represent a specific market or segment, used to measure the overall performance of investments. Investors and fund managers compare their portfolio's returns to this index to see how well they are doing. For example, the S&P 500 tracks 500 large U.S. companies, serving as a standard against which other investments are evaluated. It provides a reference point that helps investors determine whether their investments are outperforming or underperforming the broader market.