Benchmark

What it means: A benchmark is a reference point to compare your investment’s performance against, like a measuring stick.

In plain terms: It’s saying, “Did my investment do better or worse than the market average?”

Example: If you invest in UK shares, your benchmark might be the FTSE 100. If you beat that, you’re outperforming the market.

Bonds vs Equities vs Crypto:

• Bonds: Use bond indices like the Bloomberg Barclays Global Aggregate.
• Equities: Compare to stock indices like the FTSE 100 or S&P 500.
• Crypto: Benchmarks are trickier, you might compare to Bitcoin or a crypto index.

How to use it: Benchmark selection is crucial for context. Without it, performance numbers are meaningless. Make sure your benchmark actually matches what you own, for example, don’t compare a UK equity fund to a global benchmark. Use it alongside Alpha/Beta analysis to see both performance and behaviour.