Selecting an Appropriate Benchmark for an Equity Portfolio

When assessing the performance of an investment portfolio, it is crucial to select an appropriate benchmark for comparison. A benchmark is a standard against which the performance of a portfolio can be measured. Proper benchmark selection helps investors evaluate whether their portfolio is achieving desired returns relative to the market.

ABC Investment Management has a portfolio primarily consisting of large-cap U.S. equities. The firm is now considering which benchmark would be most suitable for performance evaluation of this portfolio.