Information Ratio Definition
The Information Ratio measures an investment's returns compared to the returns of a benchmark, after adjusting for the volatility of the returns.
How we Calculate Information Ratio
We use the same formula for individual funds as well as portfolios.
The formula we use to calculate the Information Ratio is:
For more information on how we calculate the Tracking Error, please click here.
For further reading, Investopedia is a great resource with video explainers. The page on Information Ratio can be found here.