Standard deviation
A measure of how much a fund's returns swing up and down around their average.
Standard deviation measures volatility: how far a fund’s returns stray from their own average. A low number means steady, predictable returns, and a high number means wild swings. Two funds can show the same average return with very different standard deviations, and the steadier one is usually far easier to hold through a rough patch.
Questions people ask
What does standard deviation tell you about a fund?
It measures volatility: how far the fund's returns stray from their own average. Low is steady and predictable; high means big year-to-year swings.
Why does standard deviation matter?
Two funds with the same average return can swing very differently. The steadier one, with a lower standard deviation, is usually far easier to hold through a rough patch.
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