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Standard Deviation

Let's delve into the world of finance and discuss an important statistical measure known as standard deviation. This term refers to the range of a fund's performance, and a higher standard deviation indicates a wider range and potential for volatility. The standard deviation figure, based on 36 monthly returns, is an annualized statistic that helps us understand the expected variability of a fund's returns. To put it simply, 68% of the time, a fund's total returns are expected to be within plus or minus the standard deviation from its mean. This range increases to 95% when we consider two times the standard deviation from the mean. Keep in mind, a fund's returns are assumed to follow a bell-shaped distribution, and a higher standard deviation means higher volatility.

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