Sharpe Ratio
A risk-adjusted return measure. UK risk-free rate often proxied by gilt yields.
Sharpe of 1+ is generally considered good; 2+ excellent.
Worked examples
10% return, 4% gilt, 15% SD: Sharpe = 0.4.
15% return, 4% gilt, 10% SD: Sharpe = 1.1.
Frequently asked questions
What's a 'good' Sharpe?
Hedge funds aim for 1+; long equity index ~0.4-0.6 long-run.