Benchmark Definition

Benchmark Definition

Learn the definition of benchmark and other ETF terminology from the glossary.

Reviewed by: Staff
Edited by: Staff

Learn more about Benchmark

In the realm of ETFs, a benchmark serves as the yardstick against which a fund's performance is measured. This predefined index, whether representing a specific market sector or asset class, establishes the standard for the ETF's success in tracking the performance of the index benchmark. Investors may use benchmarks to gauge the fund's effectiveness in delivering returns aligned with their investment goals, providing a transparent and quantifiable benchmark for evaluating the ETF's performance, and assessing its ability to fulfill its intended purpose.

Related Terms

Index, Exchange-Traded Fund (ETF)

ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.