There is exactly one risk number funds must publish

The basic idea. A fund’s headline return does not tell you how much risk it took to earn it. So there are several “risk-adjusted” measures that weigh return against risk. Of all of them, fund houses (the AMCs that run the schemes) are required to publish only one, the information ratio, on their website every day. It is also on the AMFI site, the mutual fund industry body, in a comparable format.

What it measures. How much a fund beats its benchmark by, relative to how consistently it does so. A fund that wins big one year and loses the next scores badly. A fund that wins modestly but reliably scores well.

Why that matters more than a headline return. Consistency is what you actually experience. A fund that beat its benchmark on average, while swinging violently around it, is a fund most people sell at the wrong moment.

How it is standardised. It uses the tier-one benchmark named in the scheme document, with the variation worked out from daily returns. That stops each fund house choosing a flattering yardstick.

Sharpe ratio, Treynor ratio and alpha are all useful, and all voluntary. If a fact sheet shows you one of those and not the information ratio, the mandatory number is still a search away.

Why consistency is the thing measured. Two funds can end five years in the same place, one climbing steadily and the other lurching. The second is far harder to hold, and most people do not hold it. A measure built on the variation of excess returns is measuring how likely you are to still be invested at the end.

What it cannot tell you. It is backward looking. It describes what a manager did, not what they will do, and a fund can score well right up to the point its strategy stops working. It also says nothing about whether the fund suits your goal.

How to use it. Compare like with like, across funds in the same category and over the same period. Comparing an equity fund’s number with a debt fund’s is meaningless, in the same way a Sharpe ratio cannot cross those categories either.