Social Sharing
Extended Viewer
Measuring Information Ratios
Nov 1, 1996
The ratio of active return to active risk annualized, known as the Information Ratio (IR), is a key statistic governing active management. All investors, no matter what their aversion to risk, will seek the highest information ratio possible. Unfortunately, it's very hard to accurately measure an IR. There is no quick fix to the measurement problems confronted by the investment business.