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ETFs- Benchmarks

By: Rick Walter

What is a benchmark and how does it help you or your ETF Fund?
A benchmark is a standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.
For example, "when evaluating the performance of any investment, it's important to compare it against an appropriate benchmark. In the financial field, there are hundreds of indexes that analysts use to gauge the performance of any given investment including the S&P 500, the Dow Jones Industrial Average, the Russell 2000 Index and the Lehman Brothers Aggregate Bond Index." All ETFs are built with a benchmark in mind. Does this make ETFs easier to construct and market? Maybe, according to the total ETF funds chart I have constructed show ETFs proliferating at break neck speed.
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