Sharpe ratio
Return earned above a risk-free rate for each unit of total volatility.
What it measures
The Sharpe ratio asks how much extra return a scheme delivered, over and above a risk-free rate, for every unit of ups and downs it went through. Two schemes with the same return can have very different Sharpe ratios if one of them got there with much larger swings.
Formula
Sharpe = (annualised return − risk-free rate) ÷ annualised standard deviation
How MFIC calculates it
From the last 36 month-end NAVs: the annualised return is the compounded monthly return over those 36 months; standard deviation is the standard deviation of the 36 monthly returns × √12. The risk-free rate is an assumption of 6.5% a year. Schemes with less than 37 month-ends of history show “n/a”.
How to read it
Higher is generally read as more return per unit of volatility, all else equal. Compare Sharpe ratios only within the same category and over the same period: a debt fund and a small-cap fund live in different worlds. A negative Sharpe means the scheme earned less than the risk-free assumption over the window.
Limitations
Volatility treats a sudden rise exactly like a sudden fall, and 36 months is one market phase. The ratio also depends on the risk-free rate chosen. Use it alongside the Sortino ratio and maximum drawdown.
Sharpe ratio by category today
Spread of sharpe ratio across Regular-plan schemes in each category, calculated by MFIC from AMFI NAVs as of 1 Oct 2026. The middle half of schemes falls between the 25th and 75th percentiles.
| Category (Regular plans) | Schemes | 25th percentile | Median | 75th percentile |
|---|---|---|---|---|
| Large Cap | 32 | 0.08 | 0.14 | 0.21 |
| Large & Mid Cap | 26 | 0.28 | 0.34 | 0.44 |
| Flexi Cap | 36 | 0.19 | 0.29 | 0.47 |
| Multi Cap | 23 | 0.30 | 0.41 | 0.51 |
| Mid Cap | 29 | 0.40 | 0.48 | 0.55 |
| Small Cap | 24 | 0.26 | 0.41 | 0.50 |
| ELSS | 38 | 0.09 | 0.25 | 0.32 |
| Focused | 27 | 0.15 | 0.28 | 0.41 |
| Value | 21 | 0.20 | 0.29 | 0.45 |
| Aggressive Hybrid | 30 | 0.17 | 0.25 | 0.37 |
| Balanced Advantage | 30 | 0.01 | 0.17 | 0.30 |
| Index Fund | 109 | -0.02 | 0.22 | 0.40 |
Use it in MFIC
Screen: “Flexi cap funds with Sharpe above 0.8” Open the screener Ask the AI Analyst
Related: Sortino ratio · Standard deviation (volatility) · Calmar ratio · Methodology