Marissa is a portfolio manager who has been tasked with evaluating the performance of two mutual funds, Fund A and Fund B, over the past three years. The funds operate in similar asset classes but have different investment strategies. Fund A has consistently outperformed its benchmark by an average of 3% per year, while Fund B has underperformed by 1% annually. However, Fund B has demonstrated a lower standard deviation of returns compared to Fund A, indicating lower volatility.

Marissa wishes to provide her client with insights regarding the risk-adjusted performance of these funds using the Sharpe ratio, which is defined as the excess return of the portfolio (over the risk-free rate) divided by the standard deviation of its excess return. Assume the risk-free rate is 2%. Which fund, based on the Sharpe ratio, appears to deliver superior performance?