Performance
Benchmark
Definition
A standard against which investment performance is measured. The S&P 500 is the most common benchmark for US stocks. Fund managers are evaluated on their ability to beat their benchmark.
Related Terms
Alpha
A measure of an investment's performance relative to a benchmark index. Positive alpha means the investment outperformed the benchmark; negative alpha means it underperformed. A fund with an alpha of 2 returned 2% more than its benchmark.
S&P 500
Standard & Poor's 500 — an index of 500 of the largest US publicly traded companies. Widely considered the best single measure of the US stock market. Average annual return since 1926: approximately 10%.
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