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The information ratio is active return per unit of tracking error — the efficiency of a manager's deviations from the benchmark. Multiplying it by the square root of the number of years gives a t-statistic, showing how much data is needed before the result means anything.
Information ratio
IR = (R_p - R_b) / tracking error; t = IR × √years
Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
Around 0.5 is respectable and above 1.0 is exceptional and rare over long periods.
An IR of 0.5 needs about 16 years of data to reach statistical significance, which is longer than most track records.