Standard deviation: a fund's volatility

Standard deviation measures how much a fund's returns bounce around their own average — in other words, its volatility. It's the most basic measure of risk.

How to read it

A fund averaging 12% a year with a standard deviation of 4% mostly returns roughly 8–16%. Another averaging 12% with a standard deviation of 18% could swing from −6% to +30% — a far bumpier ride for the same average.

• Lower standard deviation = steadier, more predictable returns.
• Higher = larger swings, harder to stomach, riskier if you might need the money soon.

How to use it

Standard deviation alone doesn't say if a fund is "good" — high volatility can be fine if the returns justify it. That's why it feeds into the Sharpe and Sortino ratios, which weigh return against this risk.

→ See a fund's standard deviation under "Risk Analysis" on its detail page.