What Is Information Ratio?

Information ratio

Information ratio

Information ratio

Measure a certain

Information ratio describes the risk-adjusted return from the perspective of active management, which is different from Sharpe ratio from the perspective of absolute return and total risk. The larger the information ratio, the higher the excess return obtained by the tracking error of the fund manager. Therefore, the fund with a larger information ratio performs better than a fund with a lower information ratio.

Subtract the fund's rate of return from similar funds or the broad market rate of return (the remaining value is the excess return), and divide by the standard deviation of the excess return. The higher the information ratio, the more the fund continues to outperform the broader market.

Equivalent to information ratio, also known as Appraisal ratio.