Glossary · Performance and reporting
A benchmark is the index or combination of indices a portfolio's performance is measured against.
A benchmark is only meaningful if it resembles what the portfolio is actually trying to do. Measuring a conservative allocation against a broad equity index produces a number that is accurate and useless.
Blended benchmarks, weighted to match a portfolio's target allocation, are usually the honest choice — and they have to be rebalanced on a stated schedule like the portfolio itself.