Glossary
Information ratio
How much excess return a portfolio has delivered against its benchmark, set in relation to how much it deviated to get there.
What it is
Excess return measured against active risk
The information ratio is calculated as the portfolio's excess return over the index, annualized, divided by the active risk (tracking error). The ratio answers how much excess return an investor got per unit of deviation taken. A high information ratio means the manager earned a lot of excess return for a relatively small deviation from the index. A low or negative ratio means the opposite, regardless of how large the active risk was.
- High information ratio
- The manager's deviations from the index have, on average, paid off well relative to how large they were.
- Low or negative information ratio
- The deviations from the index haven't paid off, or have even cost return, regardless of how large they were.
- The information ratio combines two measures
- The ratio says little on its own without also knowing the underlying excess return and active risk separately.
In practice
The quality of the deviation, not just its size
Active risk shows how much a fund deviates from its index. The information ratio shows whether that deviation was worth it. A fund can have high active risk and still a low information ratio, if the deviations didn't generate enough excess return relative to the risk taken. Like the other risk measures, the ratio is based on history and should be read with caution over a short measurement period.
Amos Value's information ratio in August 2026
1.11*
* Based on the fund's history since inception (July 6, 2026), not the usual 12-month window. Can fluctuate more than a figure based on longer history.
“Leaving money on the table is the price of discipline.”
Common questions about the information ratio
Related concepts
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