Information Ratio Calculator

Your details

Use "Summary" if you already know the portfolio return, benchmark return, and tracking error. Use "Periodic return series" to paste monthly or quarterly returns and let the calculator derive tracking error.
The total or annualised return of the investment portfolio over the period.
%
The return of the reference index (e.g. S&P 500) over the same period as the portfolio.
%
The annualised standard deviation of the portfolio returns minus the benchmark returns (also called active risk).
%
Switch to entering a beginning and ending portfolio value. The calculator will derive the portfolio return for you.
Information RatioGood
0.5

Active return per unit of active risk

Active return3%
Tracking error (active risk)6%
Portfolio return12%
0.5
Weak<-0.5Below benchmark-0.5-0Marginal0-0.5Good0.5-1Excellent1+

Information Ratio of 0.50 - good (skilled active management).

  • The portfolio generates +3.00% in active return relative to the benchmark.
  • Tracking error (active risk) is 6.00%, meaning the portfolio's excess returns vary by about this much annually.
  • Ratios above 0.5 are considered evidence of genuine active management skill, especially if sustained over multiple periods.
  • Compare the information ratio across multiple periods to distinguish persistent skill from short-term luck.

Next stepAn information ratio above 0.5 is a meaningful positive signal. Validate it by checking performance across different market cycles and against comparable peer funds.

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