Sharpe ratio is a metric that measures how much excess return an investment earns per unit of risk. So if someone says “this fund runs at a 4 Sharpe,” they mean

Sharpe ratio is a metric that measures how much excess return an investment earns per unit of risk. So if someone says “this fund runs at a 4 Sharpe,” they mean the fund’s returns are four times the volatility, net of risk-free rate. Super super ELI5 is that people don't like volatility in returns, even if the returns are good (i.e. down 40% one year, up 200% the next year is 34% CAGR, but crazy volatility). T-bills for example have extremely low volatility but also very low return. The holy grail is very low volatility with a great return. A 4 sharpe fund is in that quadrant.