InsiderFlow › Glossary › What is a benchmark?

What is a benchmark?

A benchmark is the reference index an investment is measured against: beating it is the (rarely achieved) goal of every active manager.

Every fund declares a benchmark: a US equity fund compares itself to the S&P 500, a global one to the MSCI World. If the fund returns 12% while the benchmark did 15%, the manager destroyed value versus the passive alternative.

Historical data (SPIVA reports) show that over 10–15 year horizons the vast majority of active funds fail to beat their benchmark after costs. It's the strongest argument for index ETFs.

Concrete example

An "international equity" fund returning 8% while the MSCI World does 10% underperformed by 2 points: over twenty years that gap halves your final capital.

How you see it in InsiderFlow

On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.

Frequently asked questions

Why is beating the benchmark so hard?

Because markets are competitive, costs compound every year and behavioral mistakes do the rest.

What benchmark should I use for my portfolio?

An index consistent with your asset allocation: for instance a mix of MSCI World and global bonds.