what is roy s safety first criterion sfratio 
roy s safety first criterion also known as the sfratio is an approach to investment decisions that sets a minimum required return for a given level of risk roy s safety first criterion allows investors to compare potential portfolio investments based on the probability that the portfolio returns will fall below their minimum desired return threshold the formula for the sfratio is s f r a t i o r e r m p where r e expected return on portfolio r m investor s minimum required return p standard deviation of the portfolio begin aligned sfratio frac r e r m sigma p textbf where r e text expected return on portfolio r m text investor s minimum required return sigma p text standard deviation of the portfolio end aligned sfratio p re rm where re expected return on portfoliorm investor s minimum required return p standard deviation of the portfolio 