---
title: "Volatility"
description: "Volatility is the annualised standard deviation of a fund's returns; it measures how widely returns have swung around their average and underpins the SRRI and Sharpe ratio."
canonical: https://fundfactsapi.com/glossary/volatility
published: 2026-09-04
updated: 2026-09-04
publisher: FundFacts API
---

# Volatility (Standard deviation, Annualised volatility, Vol)

> Volatility is the annualised standard deviation of a fund's returns; it measures how widely returns have swung around their average and underpins the SRRI and Sharpe ratio.

**Volatility** is the standard deviation of a fund's periodic returns, annualised so figures over different frequencies can be compared. A fund with 15% annualised volatility has, roughly speaking, seen its yearly return land within 15 percentage points of its average about two-thirds of the time. Factsheets usually report volatility over one, three and five years using monthly or weekly returns.

Volatility is symmetric: it counts a sharp rise the same as a sharp fall. It is a measure of how bumpy the ride has been, not of how much money could be lost; that is what [maximum drawdown](https://fundfactsapi.com/glossary/maximum-drawdown) addresses.

## Why it matters

Volatility is the building block of most risk metrics investors see. The UCITS [SRRI](https://fundfactsapi.com/glossary/srri) maps five-year volatility to a 1–7 class, the PRIIPs [SRI](https://fundfactsapi.com/glossary/sri) derives its market risk measure from it, and the [Sharpe ratio](https://fundfactsapi.com/glossary/sharpe-ratio) divides excess return by it. In a [robo-advisor](https://fundfactsapi.com/use-cases/robo-advisor) or risk-profiling flow, volatility bands are typically how funds are matched to client risk appetite.

## In the API

The three-year annualised volatility is returned alongside the risk indicator that is derived from a similar calculation.

```json
{
  "headlineMetrics": {
    "volatility3y": 12.6,
    "sharpe3y": 0.7
  },
  "riskRating": 5
}
```

Example values. Volatility is a percentage per year; `riskRating` is the class shown in the fund's current KID or KIID.

## Common pitfalls

- Past volatility is a description, not a forecast. Calm periods understate what a fund can do in a crisis.
- Windows matter. Three-year and five-year volatility can differ substantially when a stressed period enters or leaves the window.
- Compare volatility in the same currency; a hedged and an unhedged share class of one fund will show different numbers.

## In the FundFacts API payload

- `headlineMetrics.volatility3y`
- `riskRating`
- `headlineMetrics.sharpe3y`

## About FundFacts API

FundFacts turns any fund or ETF ISIN into one dated factsheet (fees and KID costs, the 1–7 risk indicator, holdings, sector and country exposure, returns) read from the fund house's own documents: as a client-ready PDF under your firm's name for advisers and wealth managers, as JSON through its API for developers, or inside ChatGPT and Claude through its MCP server.

FundFacts works inside ChatGPT and Claude as a connector (a remote MCP server): ask about any fund or ETF by ISIN, ticker or name and the assistant answers from FundFacts' dated figures, fees, risk, holdings, exposure and returns, with fund cards, side-by-side comparisons, holdings overlap and portfolio look-through.

- Free API key, no card: https://fundfactsapi.com/signup
- Documentation: https://fundfactsapi.com/docs (OpenAPI: https://fundfactsapi.com/openapi.json)
- MCP server: https://fundfactsapi.com/api/mcp (set-up for every client: https://fundfactsapi.com/mcp-server)
- Pricing: https://fundfactsapi.com/pricing
- Site index for AI assistants: https://fundfactsapi.com/llms.txt
- Informational data, not investment advice.