CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What are benchmark indices?

Benchmark indices definition

If you want to know how well an investment has fared, a good method is to compare it with an appropriate benchmark. A benchmark index is a standard used to evaluate a fund’s performance over time. The FTSE All-Share is an example of a benchmark index.

Where have you heard about benchmark indices?

All investment and pension funds have a benchmark. If you read documents on mutual funds you own, you might have noticed that investment companies will compare performance to a benchmark index. A stock fund, for example, might show how it has outperformed the FTSE All-Share.

What you need to know about benchmark indices...

Benchmark indices enable you to weigh up the real success of your portfolio. An annual return of 5% on a bond portfolio might seem good, but if the portfolio’s benchmark returns 6% over the same period, you’ve fallen short of your goal.

Fund managers can choose their own indices, but they have to be credible. Bond firms have created numerous indices to provide benchmarks for almost any bond you might want.

Mainstream UK funds often use the FTSE All-Share index as a benchmark. It contains about 600 of the largest companies listed on the London Stock Exchange.

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 650,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading