Ch.11 · Scheme Performance Disclosure Rules · hard
What does a Sharpe Ratio of 1.2 in a mutual fund fact sheet indicate?
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EXPLANATION
Sharpe Ratio = (Fund Return − Risk-Free Rate) ÷ Standard Deviation. A ratio of 1.2 means 1.2 units of excess return (above risk-free rate) per unit of total risk. Higher Sharpe = better risk-adjusted performance. It allows comparison across funds with different risk levels.
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