Standard deviation is a measure of the dispersion of a set of data from its mean. If the data points are further from the mean, there is higher deviation within the data set. Standard deviation is calculated as the square root of variance by determining the variation between each data point relative to the mean.
In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is a statistical measurement that sheds light on historical volatility. For example, a volatile stock has a high standard deviation, while the deviation of a stable blue-chip stock is lower. A large dispersion indicates how much the return on the fund is deviating from the expected normal returns.
The Sharpe Index is a exact risk performance indicator. It identifies the major ( or minor) return reveals by the fund compared with the risk- free investment, usually the Bot, ( in the Morningstar methodology it is the Euribor 1 month), and relates to the risk supported and expressed by the standard deviation.
The higher the Sharpe index, the better the fund's historical performance corrected for the risk and therefore the efficiency of the management.
In analytical terms the Sharpe index is as follows: ( Rf-Rb) Sigma where Rf is the return of the fund, Rb is the risk-free return investment ( Bot) and Sigma is the volatility of returns.
A SICAV is a type of open-ended investment fund in which the amount of capital in the fund varies according to the number of investors. Shares in the fund are bought and sold based on the fund's current net asset value. SICAV funds are some of the most common investment vehicles in Europe.
A SICAV fund, considered a legal entity, will have a board of directors to oversee the fund. Each individual shareholder receives voting rights and has the right to attend the annual general meetings. The term Société d'investissement à Capital Variable is most well known and used in France, Luxembourg, and Italy where it's called Societa' di Investimento a Capital Variable.
The brokerage firms (SIM) are companies which supplie investment services toward the customer. They can trade stocks, bonds, mutual fund shares, derivative products, manage private assets and offer financial consulting.
The SIMs are registered in a professional register managed by the Consob and available on the website www.consob.it.
