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Risk measures
What is standard deviation?
Standard deviation measures how much a fund's returns have swung around their average. The higher it is, the bumpier the ride.
How it works
Factsheets usually show the annualised standard deviation of a fund's returns over the past three years. Roughly two years in three, returns fall within one standard deviation of the average, if returns follow a normal pattern, which in a crash they often do not.
Example
A fund averaging 12% a year with a standard deviation of 15% would usually see yearly returns between −3% and 27%.
Keep in mind
- Compare standard deviations only within the same category and period.
- It treats upward and downward swings alike.
Questions people ask
What is a good standard deviation?
There is no single good number; compare funds in the same category over the same period.
Is standard deviation the same as risk?
It is one measure of risk: volatility. It does not capture credit risk or the chance of a rare crash.
Related terms
General information for education, not investment advice or a recommendation of any scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future. Last reviewed 25 October 2026.