when evaluating your investment portfolio s performance it s important to compare it against a benchmark representing the industry sector and market segment to which it belongs however if your portfolio is diversified you may not be able to compare the total portfolio against one index you may need to evaluate it in sections based on how you ve allocated your investments 
most retail investors don t build their portfolios by choosing individual stocks however it is possible to do so but in many cases it is simply too expensive and time consuming to evaluate stocks and purchase the ones that meet your investing criteria so many choose mutual funds or exchange traded funds etfs that mirror the performance of specific indexes if you have a fund or more than one in your portfolio you can compare the information fund managers already provide to see how your funds are doing compared to the indexes they mirror for example the vanguard mega cap growth etf mgk is an exchange traded fund that tracks the performance of the crsp u s mega cap growth index if you had purchased shares of mgk and wanted to evaluate its performance you d first find the fund s page on vanguard s website and locate the performance and fees tab and ensure summary is underlined by clicking on it you ll see the following information 8you can see the fund s changes in market price from its inception to the last month s performance and compare it to its benchmark then find the historical volatility and see how the fund s return and risk compares to that of its benchmark r squared measures how closely the fund has tracked its benchmark in mgk s case it has very closely matched the returns of its benchmark a value of 1 0 indicate tracking while less than 1 0 indicates less tracking beta is a measure of the fund s risk compared to that of the benchmark again mgk has matched its benchmark s risk level again 1 0 indicates it has tracked while less or more than 1 0 indicates less or more tracking respectively mgk has historically matched the return and risk of the benchmark index it was designed to track give or take a few percentage points however when compared to the dow jones u s total stock market index mgk has returned less and has slightly more risk 