Finance Glossary
Information Ratio (IR)
What is the Information Ratio?
The information ratio is an indicator used to assess the return of a fund relative to its benchmark index.
It is a performance stability indicator that measures the ratio between a fund's outperformance relative to its benchmark index and its Tracking Error (the standard deviation of the fund's relative performance compared to its benchmark index). The higher the information ratio, the more the investment fund consistently outperforms the benchmark index while maintaining a low Tracking Error.