A way of measuring how well the company is doing – benchmarks can be indices (e.g. the FTSE 100 index), a level of return (e.g. the Bank of England base rate) or the performance of other competing companies.
Investment Managers often use the Benchmark as a reference point for the amount that they hold in stock in their portfolio and as a risk control. if the portfolio held the same proportions of stocks as the index, its performance would track that of the index. If the investment manager chooses to own more or less of the stock than the index he / she is taking an active position.