1, what is the Sharp ratio of funds?
Without considering the risk, the expected rate of return of product A is 5%, and the expected rate of return of product B is 10%. Investors will undoubtedly choose product B. But any investment product is risky and the risk is very uncertain. Even the same product has different risks in different periods. So after adding risk factors, the consideration becomes complicated.
In order to weigh the expected return and risk more effectively, many investors will use the Sharp ratio of the fund. Sharp ratio, also known as Sharp Index, is an index that comprehensively judges expected returns and risks, and to some extent, it can reflect the corresponding risks of fund products when they obtain certain expected returns. Its core is to help investors choose the most cost-effective portfolio.
2. How to check the Sharp ratio of funds?
You can see the information about Sharp ratio in major fund rating agencies, such as Morningstar Fund Network. When looking at the sharp ratio, it should be noted that only the same type of funds can be compared, because the sharp ratio of different types of funds is very different. For example, the fluctuation of stock funds is generally greater than that of other funds. It is meaningless to compare stock funds with pure debt funds.
On the whole, when choosing fund products, Sharp ratio is a good indicator to measure product risk, but Sharp ratio will be affected by factors such as fund type and scale, which needs rational consideration. The above contents about how to check the sharp ratio of funds hope to help everyone. Warm reminder, financial management is risky and investment needs to be cautious.