Sharpe Ratio

I am learning the ratios to better myself in unit trust investment.

The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate the performance of a portfolio. The ratio helps to make the performance of one portfolio comparable to that of another portfolio by making an adjustment for risk.

E.g. Fund A  15% return
        Fund B 12% return

Is Fund A better? Fund A is better if it doesn't take higher risk than fund B. Risk adjusted return will tell you which one is better.

Fund A standard deviation 8%
Fund B standard deviation 5%
risk free rate is 5%

Sharpe ratio for Fund A is (15%-5%)/8% = 1.4
Sharpe ratio for Fund B is (12%-5%)/5% = 1.25

This means to say Fund B is able to generate a higher return on a risk-adjusted basis.

A ratio of 1 and more is good, 2 and more is very good, and 3 and more is considered excellent.

Public Mutual does compute sharpe ratio in the consultant's software. I don't know where to look for this reading in any public domain.