Funds Intermediate: Benchmarks for Funds

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1.
Why is the Dow Jones Industrial Average rarely used as a performance benchmark for stock mutual funds?
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Its range is very small. With only 30 stocks, it's hardly indicative of the whole stock market.
2.
In the world of mutual funds, peer groups are funds that buy the same types of securities that your fund buys.
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True. Their value is that they give you a way to examine your fund's performance.
3.
In regard to mutual fund benchmarks, what are peer groups?
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Funds that buy the same types of securities. You should compare funds to others in the same peer group.
4.
Your personal benchmark in investing refers to _______.
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The yearly return you will need to meet your goal. This figure is what you will aim to match every year you invest for your goal.
5.
Once you've calculated your personal benchmark for investing, choose a fund that _______.
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Usually returns about the same as the benchmark. It's tempting to pick a fund that returns more than you need, but remember: the greater the return, the greater the potential for loss. Be sure the fund you pick has a history of returning as much as your benchmark, or you may not meet your goal.