Volatility : We have adopted Micropal's definition of volatility: the standard deviation of a fund's monthly returns over the most recent 36-month period. The higher the resultant number, the more volatile, or variable, that fund's monthly performance has been. Investment theory uses "volatility" as synonymous with "risk". A 3 years (36-month) period is considered optimal to avoid possible short term distortions.
Sharpe ratio : This ratio, bearing the name of economics Nobel-prize winner William Sharpe, gives a sense of the return achieved for a certain amount of risk. It expresses how much more (or less) an investor has gained compared with a riks-free investment given the risk (expressed as volatility) taken. We calculate the ratio by taking the 3-year annualized return of the fund, from which we substract the risk free rate in the fund's currency. This is obtained by averaging the monthly levels for 3-month treasuries over the past 3 years. Then, using monthly data, we divide the result by the annualized volatility of the reference index.