5 Things to Know Before Buying a Mutual Fund
4. Standard Deviation
The risk allied with a mutual fund is seen in the instability of the performance. Standard deviation is a tool used to measure the volatility of a fund. The higher the standard deviation, the higher is the volatility or instability of the fund’s performance which may be related with higher returns. When you are comparing many funds, most of them might have same performance, but you must choose the one with lower standard deviation as it will maximize the returns for the risk taken on.
