There are many sector-specific indexes for funds that operate within specific industries (for example, for portfolios that focus on alternative energy stocks, there's the S&P Clean Energy Index). There are few such indexes for funds that avoid certain sectors, however; but many value funds may tend to do just that, by staying away from commodities or financials or other sectors with high unpredictability.
As such, Karsan Value Funds may best be benchmarked against a general index. While indices that are covered often by the major media may make for the easiest comparisons, not every general index is appropriate. As we saw here, both the Dow Jones Industrials and the S&P 500 make for poor proxies, each for their own reasons.
The Russell 2000, on the other hand, is recognized enough for investors to find credible, yet it has a median market cap of just $325 million, which serves as an appropriate benchmark for a general fund that focuses on smaller companies.
Of course, even if an investor disagrees with the benchmark a fund manager has chosen, he is free to compare the fund's returns to a benchmark of his choosing. No matter what benchmark is chosen, however, an appropriate time frame must be applied (comparisons should be made over years, not months), whether results are negative or positive.