Sharp ratio measures the risk-return ratio of the fund, that is, how much excess return can be generated by the total risk per unit relative to the risk-free interest rate. Therefore, the greater the Sharp ratio, the better the return risk performance of the fund. Sharp ratio = (annualized rate of return on funds-risk-free interest rate)/annualized volatility of funds. For example, if the Sharp ratio of Fund A is 0.5 and the average Sharp ratio of the same type of fund is 0.2, it means that the risk-return performance of Fund A is better than the average level of the same type of fund.