A benchmark is a proxy for a market, economy, class of equity, or sector, generally setting a standard against which the performance of a stock, bond, mutual fund, commodity, or other security is measured.
Benchmarks are also used to gauge the health of a market, sector, or entire economy.
Wall Street uses benchmarks that they make up themselves to justify their fees.  Generally, the earnings multiple for the market as a whole is a helpful benchmark.  Benchmarks are a smokescreen used by Wall Street to distract investors from gauging their investment returns against cash. Comparisons are fraught with peril, because a fund can look unjustifiably good or bad if it is compared with the wrong index.  Investors are concerned with absolute, not relative risk and return. Minimizing risk is about diversification. 
From "surveyor's point of reference," 1838,