It implies how much returns on a fund are deviating from the average returns based on its historical performance. Standard Deviation helps in finding out the degree to which the fund fluctuates in relation to the average returns of a fund over a period of time. It will give an idea about the consistency of a fund's returns. A higher standard deviation means higher volatility and a lower standard deviation means lower volatility. Hence, from the investor's perspective lower the ratio it is better.
The concept of systematic investment plan is similar to recurring bank deposits wherein investors contribute a fixed sum of money at regular intervals. SIPs make the market timing irrelevant as one invests both at the high and low points of the market, and make the best of an opportunity that is otherwise difficult to predict. SIPs help investors to tide over the volatility and cut down the losses on the portfolio by averaging out the cost â€" the concept is commonly referred to as "rupee cost averaging" â€" since investors purchase more units when the NAV is low and fewer units when the NAV is high. SIPs offer a simple and disciplined way to generate higher risk-adjusted returns and meet the desired goals.
The excess or abnormal returns earned by the mutual fund portfolio compared to its benchmark. A positive alpha on the investment implies that the fund has performed better than expected, given its beta. A negative alpha indicates that the fund has underperformed.