While mutual funds are required to identify a benchmark and state performance over certain timeframes and against certain indices, hedge funds are not legally required to do so.  As such, hedge fund managers typically do not benchmark their performance.  However, pension funds and other institutional investors may assess hedge fund returns, either explicitly or implicitly, in light of a benchmark.  This first article in our two-part series discusses the use of benchmarks as a performance measure, exploring if, and how, pension funds and institutional investors evaluate hedge fund performance against a benchmark.  The second article will discuss the practical consequences of subjecting hedge funds to performance benchmarks; consider whether such a practice could shift the performance emphasis of hedge funds away from absolute returns toward a focus on benchmarked results; and analyze the parameters surrounding the use of benchmarks for evaluating hedge funds.  For discussion of another method of performance measurement, see “Common Practices, Benefits and Drawbacks for Hedge Fund Managers of Using Target Returns (Part One of Two),” Hedge Fund Law Report, Vol. 8, No. 16 (Apr. 23, 2015).