How much you were paid for the swings you sat through. Higher is better; roughly, above 1 is good and below 0 means a fixed deposit would have done better. Computed with a 6.5% risk-free rate, so it is only comparable to other Sharpe figures on this site.
For the formula and the constants behind this figure, see Methodology.
Guides that use Sharpe ratio
4 guides put this term to work.
- How to read a mutual fund factsheet like a proRead it backwards: mandate and benchmark, then holdings and concentration, then cost, then risk — and only then returns. Four minutes, in the order that matters.
- Sharpe and Sortino: measuring risk-adjusted returnsVolatility, Sharpe, Sortino and maximum drawdown measure four different things, and only one of them predicts whether you will still be holding in year three.
- Treynor and information ratio: advanced tools for comparing fundsOne prices market risk, the other prices the decision to differ from the index. For choosing between active funds in one category, the information ratio is the most relevant number on the page.
- Consumption and FMCG funds: the defensive play that isn't always defensiveThe steadiest earnings in the market, already priced as such — plus a rural and input-cost macro exposure most buyers of a 'defensive' fund never notice.
More on risk
How rough the ride was — the half of the story a return number hides.
- Standard deviation
- How much daily returns scatter around their average, annualized. Trailing 3 years.
- Maximum drawdown
- The largest peak-to-trough fall the fund has ever had, over its full history.
- Sortino ratio
- Like Sharpe, but only downside moves count as risk.
- Riskometer
- A six-step risk label from Low to Very High, in SEBI's format.