Benchmarks are an inportant aspect of measure risk and performance in a portfolio or mutual fund. You need to compare your investment to a benchmark that is most reflective of it. So if you do not benchmark correctly you cannot gauge how your investment is performing in relation to others that are similar. Plus you will not know how the risk of your portfolio is near what it should be.
For example, if you have a small cap growth mutual fund you would not benchmark it versus the S&P 500 because those investment types are almost polar opposites–the risk and permoance comparision would be inaccurate. So what out for some mutual fund companies that benchmark their fund versus a benchmark that they compare well to in order to make their investment look they way they want it to look; not as it should actually be seen. If you have a large cap core mutual fund then the S&P 500 would be a great benchmark to use to compare.