The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

Benchmark is a comparative tool used as a point of reference against which to measure your investment portfolio’s performance. By using a benchmark that’s in line with your risk tolerance and the nature of your investment, you should gain a better understanding of how your portfolio is doing in comparison to the market. 

Benchmark definition

Benchmark is a comparative tool used as a point of reference against which to measure your investment portfolio’s performance. By using a benchmark that’s in line with your risk tolerance and the nature of your investment, you should gain a better understanding of how your portfolio is doing in comparison to the market.

Dozens of different calculated values are used as benchmarks, ranging from the more commonly known equity indices, such as FTSE 100 or the Dow Jones, to lesser-known bond indices such as the Barclays Capital Aggregate Bond Index.

For example, if your investment strategy focusses on large UK stocks, it might be useful to compare your portfolio’s performance with the gains or losses on the FTSE 100 as a whole. 

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