{"product_id":"information-ratio","title":"Information Ratio Calculator","description":"\u003cstyle\u003e\n.ir-calculator {\n  --ink: #0f172a;\n  --muted: #475569;\n  --border: #e2e8f0;\n  --surface: #ffffff;\n  --tint: #f8fafc;\n  --primary: #1d4ed8;\n  --accent: #c2410c;\n  --accent-hover: #9a3412;\n  --chart-1: #1e40af;\n  --chart-2: #0d9488;\n  --chart-3: #7c3aed;\n  --chart-4: #be185d;\n  --chart-5: #334155;\n  color: var(--ink);\n  background: var(--surface);\n  border: 1px solid var(--border);\n  border-radius: 8px;\n  box-shadow: 0 1px 2px rgba(15, 23, 42, .06);\n  font-family: -apple-system, BlinkMacSystemFont, \"Segoe UI\", Roboto, Helvetica, Arial, sans-serif;\n  font-size: 15px;\n  line-height: 1.55;\n  margin: 0 auto;\n  max-width: 1200px;\n  overflow-wrap: anywhere;\n  padding: 24px;\n  width: 100%;\n}\n.ir-calculator,\n.ir-calculator *,\n.ir-calculator *::before,\n.ir-calculator *::after { box-sizing: border-box; }\n.ir-calculator * { min-width: 0; }\n.ir-calculator h2,\n.ir-calculator h3,\n.ir-calculator p { margin-top: 0; }\n.ir-calculator a { color: var(--primary); text-underline-offset: 2px; }\n.ir-calculator a:hover { text-decoration-thickness: 2px; }\n.ir-calculator button,\n.ir-calculator input { font: inherit; }\n.ir-calculator button { cursor: pointer; }\n.ir-header { border-bottom: 1px solid var(--border); padding-bottom: 20px; }\n.ir-title { font-size: 24px; font-weight: 700; letter-spacing: -.02em; line-height: 1.25; margin-bottom: 8px; }\n.ir-subtitle { color: var(--muted); margin-bottom: 16px; max-width: 820px; }\n.ir-pills { display: flex; flex-wrap: wrap; gap: 8px; }\n.ir-pill { background: var(--tint); border: 1px solid var(--border); border-radius: 999px; color: var(--muted); font-size: 13px; font-weight: 600; padding: 4px 10px; }\n.ir-pill strong { color: var(--ink); font-variant-numeric: tabular-nums; }\n.ir-toolbar { align-items: center; display: flex; flex-wrap: wrap; gap: 10px; padding: 20px 0; }\n.ir-button { align-items: center; border: 1px solid transparent; border-radius: 6px; display: inline-flex; font-weight: 650; gap: 10px; justify-content: center; min-height: 46px; padding: 12px 18px; text-decoration: none; white-space: nowrap; }\n.ir-button:focus-visible,\n.ir-input:focus-visible { outline: 3px solid #1d4ed8; outline-offset: 2px; }\n.ir-download { background: var(--accent); color: #fff; }\n.ir-download:hover { background: var(--accent-hover); box-shadow: 0 2px 5px rgba(15, 23, 42, .14); }\n.ir-download:active { transform: translateY(1px); }\n.ir-download-icon { display: inline-block; font-size: 18px; line-height: 1; }\n.ir-reset { background: var(--surface); border-color: #64748b; color: var(--ink); }\n.ir-reset:hover { background: var(--tint); border-color: var(--muted); }\n.ir-workspace { display: grid; gap: 24px; grid-template-columns: minmax(0, 1fr); }\n.ir-panel { background: var(--surface); border: 1px solid var(--border); border-radius: 8px; padding: 20px; }\n.ir-panel-title { font-size: 18px; font-weight: 650; line-height: 1.35; margin-bottom: 16px; }\n.ir-form-grid { display: grid; gap: 16px; grid-template-columns: repeat(2, minmax(0, 1fr)); }\n.ir-field { display: flex; flex-direction: column; gap: 8px; }\n.ir-label { color: var(--ink); font-size: 14px; font-weight: 600; }\n.ir-control-wrap { position: relative; }\n.ir-input { background: #fff; border: 1px solid #64748b; border-radius: 6px; color: var(--ink); font-size: 15px; min-height: 44px; padding: 10px 42px 10px 12px; width: 100%; }\n.ir-input:hover { border-color: #64748b; }\n.ir-input[aria-invalid=\"true\"] { border-color: #b91c1c; }\n.ir-suffix { color: var(--muted); font-size: 14px; font-weight: 600; pointer-events: none; position: absolute; right: 12px; top: 50%; transform: translateY(-50%); }\n.ir-prefix { color: var(--muted); font-size: 14px; font-weight: 600; left: 12px; pointer-events: none; position: absolute; top: 50%; transform: translateY(-50%); }\n.ir-money { padding-left: 28px; }\n.ir-helper { color: var(--muted); font-size: 13px; font-weight: 500; line-height: 1.45; min-height: 38px; }\n.ir-error { color: #b91c1c; font-size: 13px; font-weight: 600; min-height: 20px; }\n.ir-primary-card { background: #eff6ff; border: 1px solid #bfdbfe; border-radius: 8px; margin-bottom: 16px; padding: 20px; }\n.ir-primary-label { color: #1e3a8a; font-size: 13px; font-weight: 650; margin-bottom: 4px; }\n.ir-primary-value { color: #172554; font-size: 30px; font-weight: 700; font-variant-numeric: tabular-nums; letter-spacing: -.02em; line-height: 1.2; margin-bottom: 8px; }\n.ir-primary-text { color: #1e3a8a; font-size: 13px; font-weight: 500; margin-bottom: 0; }\n.ir-results-grid { display: grid; gap: 12px; grid-template-columns: repeat(2, minmax(0, 1fr)); }\n.ir-result-card { background: var(--tint); border: 1px solid var(--border); border-radius: 8px; padding: 14px; }\n.ir-result-label { color: var(--muted); font-size: 13px; font-weight: 600; margin-bottom: 4px; }\n.ir-result-value { color: var(--ink); font-size: 20px; font-weight: 700; font-variant-numeric: tabular-nums; line-height: 1.25; }\n.ir-formula { background: var(--tint); border-left: 4px solid var(--primary); border-radius: 0 6px 6px 0; color: var(--muted); font-size: 13px; margin-top: 16px; padding: 12px; }\n.ir-section { margin-top: 24px; }\n.ir-chart-card { background: var(--surface); border: 1px solid var(--border); border-radius: 8px; padding: 20px; }\n.ir-chart-head { margin-bottom: 16px; }\n.ir-chart-title { font-size: 18px; font-weight: 650; margin-bottom: 4px; }\n.ir-chart-kicker { color: var(--muted); font-size: 13px; font-weight: 500; margin-bottom: 0; }\n.ir-chart-cluster { align-items: start; display: grid; gap: 24px; grid-template-columns: minmax(0, 1fr); margin: 0 auto; max-width: 900px; }\n.ir-plot-block { min-width: 0; }\n.ir-plot { min-height: 290px; width: 100%; }\n.ir-plot svg { display: block; height: auto; max-height: 360px; width: 100%; }\n.ir-chart-empty { align-items: center; background: var(--tint); border: 1px dashed #64748b; border-radius: 6px; color: var(--muted); display: none; font-size: 13px; justify-content: center; min-height: 120px; padding: 20px; text-align: center; }\n.ir-legend { display: grid; gap: 10px; min-width: 0; }\n.ir-legend-row { align-items: center; display: grid; font-size: 13px; gap: 8px 12px; grid-template-columns: 12px minmax(90px, max-content) max-content; justify-content: start; }\n.ir-swatch { border-radius: 2px; height: 12px; width: 12px; }\n.ir-legend-name { color: var(--muted); font-weight: 600; }\n.ir-legend-value { color: var(--ink); font-variant-numeric: tabular-nums; font-weight: 700; }\n.ir-chart-table-wrap { margin-top: 16px; overflow-x: auto; width: 100%; }\n.ir-chart-table { border-collapse: collapse; min-width: 420px; width: 100%; }\n.ir-chart-table th,\n.ir-chart-table td { border-bottom: 1px solid var(--border); padding: 10px 12px; text-align: left; }\n.ir-chart-table th { background: #0f2747; color: #fff; font-size: 13px; font-weight: 650; }\n.ir-chart-table td { font-size: 13px; }\n.ir-chart-table td:last-child { font-variant-numeric: tabular-nums; text-align: right; }\n.ir-chart-caption { background: var(--tint); border: 1px solid var(--border); border-radius: 6px; color: var(--muted); font-size: 13px; margin-top: 16px; padding: 10px 12px; }\n.ir-safe-stack .ir-chart-cluster { grid-template-columns: minmax(0, 1fr) !important; row-gap: 20px !important; }\n.ir-safe-stack .ir-plot { min-height: 240px; }\n.ir-safe-stack .ir-chart-caption { margin-top: 20px; }\n.ir-table-card { background: var(--surface); border: 1px solid var(--border); border-radius: 8px; padding: 20px; }\n.ir-table-wrap { overflow-x: auto; width: 100%; }\n.ir-table { border-collapse: collapse; min-width: 640px; width: 100%; }\n.ir-table th,\n.ir-table td { border-bottom: 1px solid var(--border); padding: 11px 12px; text-align: left; }\n.ir-table th { background: #0f2747; color: #fff; font-size: 13px; font-weight: 650; }\n.ir-table td { font-size: 14px; }\n.ir-table td:nth-child(n+2) { font-variant-numeric: tabular-nums; text-align: right; }\n.ir-table-note { background: var(--tint); border: 1px solid var(--border); border-radius: 6px; color: var(--muted); font-size: 13px; margin-top: 16px; padding: 10px 12px; }\n.ir-safe-table-stack .ir-table-note { margin-top: 20px; }\n.ir-education { border-top: 1px solid var(--border); margin-top: 32px; padding-top: 8px; }\n.ir-education h2 { font-size: 18px; font-weight: 650; line-height: 1.35; margin: 24px 0 10px; }\n.ir-education h3 { font-size: 15px; font-weight: 700; margin: 18px 0 8px; }\n.ir-education p { color: #334155; margin-bottom: 12px; }\n.ir-education ul { color: #334155; margin: 0 0 14px 20px; padding: 0; }\n.ir-education li { margin-bottom: 6px; }\n.ir-code { background: var(--tint); border: 1px solid var(--border); border-radius: 6px; color: var(--ink); display: block; font-family: ui-monospace, SFMono-Regular, Menlo, Consolas, monospace; font-size: 13px; margin: 12px 0; padding: 12px; }\n.ir-visually-hidden { clip: rect(0 0 0 0); clip-path: inset(50%); height: 1px; overflow: hidden; position: absolute; white-space: nowrap; width: 1px; }\n@media (min-width: 640px) {\n  .ir-chart-cluster { align-items: center; grid-template-columns: minmax(340px, 1fr) max-content; }\n  .ir-legend { align-self: center; }\n}\n@media (min-width: 900px) {\n  .ir-workspace { grid-template-columns: minmax(0, 1fr) minmax(340px, .85fr); }\n}\n@media (max-width: 639px) {\n  .ir-calculator { padding: 16px; }\n  .ir-form-grid,\n  .ir-results-grid { grid-template-columns: minmax(0, 1fr); }\n  .ir-toolbar { align-items: stretch; }\n  .ir-button { width: 100%; }\n  .ir-panel,\n  .ir-chart-card,\n  .ir-table-card { padding: 16px; }\n  .ir-plot { min-height: 250px; }\n  .ir-chart-cluster { row-gap: 16px; }\n  .ir-chart-caption { margin-top: 16px; }\n}\n@media (max-width: 360px) {\n  .ir-calculator { padding: 12px; }\n  .ir-title { font-size: 22px; }\n  .ir-primary-value { font-size: 28px; }\n  .ir-panel,\n  .ir-chart-card,\n  .ir-table-card { padding: 14px; }\n  .ir-legend-row { grid-template-columns: 12px minmax(0, 1fr) max-content; }\n  .ir-chart-caption,\n  .ir-table-note { margin-top: 12px; }\n}\n\u003c\/style\u003e\n\u003cdiv class=\"ir-calculator\" data-calculator-root\u003e\n  \u003cheader class=\"ir-header\"\u003e\n    \u003ch2 class=\"ir-title\"\u003eInformation Ratio Calculator\u003c\/h2\u003e\n    \u003cp class=\"ir-subtitle\"\u003eMeasure how much active return a portfolio generated for each unit of tracking error relative to its benchmark.\u003c\/p\u003e\n    \u003cdiv class=\"ir-pills\" aria-label=\"Live calculation summary\"\u003e\n      \u003cspan class=\"ir-pill\"\u003ePortfolio return \u003cstrong class=\"ir-pill-portfolio\"\u003e10.00%\u003c\/strong\u003e\u003c\/span\u003e\n      \u003cspan class=\"ir-pill\"\u003eExcess return \u003cstrong class=\"ir-pill-excess\"\u003e2.00%\u003c\/strong\u003e\u003c\/span\u003e\n      \u003cspan class=\"ir-pill\"\u003eTracking error \u003cstrong class=\"ir-pill-tracking\"\u003e5.00%\u003c\/strong\u003e\u003c\/span\u003e\n      \u003cspan class=\"ir-pill\"\u003eIR \u003cstrong class=\"ir-pill-ratio\"\u003e0.40\u003c\/strong\u003e\u003c\/span\u003e\n    \u003c\/div\u003e\n  \u003c\/header\u003e\n\n  \u003cdiv class=\"ir-toolbar\" aria-label=\"Calculator actions\"\u003e\n    \u003cbutton class=\"ir-button ir-download\" type=\"button\"\u003e\u003cspan class=\"ir-download-icon\" aria-hidden=\"true\"\u003e⇩\u003c\/span\u003e\u003cspan\u003eDownload Excel\u003c\/span\u003e\u003c\/button\u003e\n    \u003cbutton class=\"ir-button ir-reset\" type=\"button\"\u003eReset\u003c\/button\u003e\n  \u003c\/div\u003e\n\n  \u003cdiv class=\"ir-workspace\"\u003e\n    \u003csection class=\"ir-panel\" aria-labelledby=\"ir-inputs-title\"\u003e\n      \u003ch3 class=\"ir-panel-title\" id=\"ir-inputs-title\"\u003ePortfolio assumptions\u003c\/h3\u003e\n      \u003cdiv class=\"ir-form-grid\"\u003e\n        \u003cdiv class=\"ir-field\"\u003e\n          \u003clabel class=\"ir-label\" for=\"ir-beginning\"\u003eBeginning portfolio value\u003c\/label\u003e\n          \u003cdiv class=\"ir-control-wrap\"\u003e\n            \u003cspan class=\"ir-prefix\" aria-hidden=\"true\"\u003e$\u003c\/span\u003e\n            \u003cinput class=\"ir-input ir-money\" id=\"ir-beginning\" name=\"ir-beginning\" type=\"text\" inputmode=\"decimal\" value=\"2,000,000.00\" aria-describedby=\"ir-beginning-help ir-beginning-error\"\u003e\n          \u003c\/div\u003e\n          \u003cdiv class=\"ir-helper\" id=\"ir-beginning-help\"\u003ePortfolio market value at the start of the measurement period.\u003c\/div\u003e\n          \u003cdiv class=\"ir-error\" id=\"ir-beginning-error\" role=\"status\"\u003e\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-field\"\u003e\n          \u003clabel class=\"ir-label\" for=\"ir-ending\"\u003eEnding portfolio value\u003c\/label\u003e\n          \u003cdiv class=\"ir-control-wrap\"\u003e\n            \u003cspan class=\"ir-prefix\" aria-hidden=\"true\"\u003e$\u003c\/span\u003e\n            \u003cinput class=\"ir-input ir-money\" id=\"ir-ending\" name=\"ir-ending\" type=\"text\" inputmode=\"decimal\" value=\"2,200,000.00\" aria-describedby=\"ir-ending-help ir-ending-error\"\u003e\n          \u003c\/div\u003e\n          \u003cdiv class=\"ir-helper\" id=\"ir-ending-help\"\u003ePortfolio market value at the end of the same period.\u003c\/div\u003e\n          \u003cdiv class=\"ir-error\" id=\"ir-ending-error\" role=\"status\"\u003e\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-field\"\u003e\n          \u003clabel class=\"ir-label\" for=\"ir-benchmark\"\u003eBenchmark return\u003c\/label\u003e\n          \u003cdiv class=\"ir-control-wrap\"\u003e\n            \u003cinput class=\"ir-input\" id=\"ir-benchmark\" name=\"ir-benchmark\" type=\"text\" inputmode=\"decimal\" value=\"8.00\" aria-describedby=\"ir-benchmark-help ir-benchmark-error\"\u003e\n            \u003cspan class=\"ir-suffix\" aria-hidden=\"true\"\u003e%\u003c\/span\u003e\n          \u003c\/div\u003e\n          \u003cdiv class=\"ir-helper\" id=\"ir-benchmark-help\"\u003eTotal return of the relevant benchmark over the same period.\u003c\/div\u003e\n          \u003cdiv class=\"ir-error\" id=\"ir-benchmark-error\" role=\"status\"\u003e\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-field\"\u003e\n          \u003clabel class=\"ir-label\" for=\"ir-tracking\"\u003eTracking error\u003c\/label\u003e\n          \u003cdiv class=\"ir-control-wrap\"\u003e\n            \u003cinput class=\"ir-input\" id=\"ir-tracking\" name=\"ir-tracking\" type=\"text\" inputmode=\"decimal\" value=\"5.00\" aria-describedby=\"ir-tracking-help ir-tracking-error\"\u003e\n            \u003cspan class=\"ir-suffix\" aria-hidden=\"true\"\u003e%\u003c\/span\u003e\n          \u003c\/div\u003e\n          \u003cdiv class=\"ir-helper\" id=\"ir-tracking-help\"\u003eAnnualized standard deviation of active returns; must be above zero.\u003c\/div\u003e\n          \u003cdiv class=\"ir-error\" id=\"ir-tracking-error\" role=\"status\"\u003e\u003c\/div\u003e\n        \u003c\/div\u003e\n      \u003c\/div\u003e\n    \u003c\/section\u003e\n\n    \u003csection class=\"ir-panel\" aria-labelledby=\"ir-results-title\"\u003e\n      \u003ch3 class=\"ir-panel-title\" id=\"ir-results-title\"\u003eLive results\u003c\/h3\u003e\n      \u003cdiv class=\"ir-primary-card\"\u003e\n        \u003cdiv class=\"ir-primary-label\"\u003eInformation ratio\u003c\/div\u003e\n        \u003cdiv class=\"ir-primary-value ir-ratio-value\"\u003e0.40\u003c\/div\u003e\n        \u003cp class=\"ir-primary-text ir-interpretation\"\u003ePositive active return, but modest relative to tracking error.\u003c\/p\u003e\n      \u003c\/div\u003e\n      \u003cdiv class=\"ir-results-grid\"\u003e\n        \u003cdiv class=\"ir-result-card\"\u003e\n          \u003cdiv class=\"ir-result-label\"\u003ePortfolio return\u003c\/div\u003e\n          \u003cdiv class=\"ir-result-value ir-portfolio-value\"\u003e10.00%\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-result-card\"\u003e\n          \u003cdiv class=\"ir-result-label\"\u003eExcess return\u003c\/div\u003e\n          \u003cdiv class=\"ir-result-value ir-excess-value\"\u003e2.00%\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-result-card\"\u003e\n          \u003cdiv class=\"ir-result-label\"\u003eActive gain \/ loss\u003c\/div\u003e\n          \u003cdiv class=\"ir-result-value ir-active-dollar\"\u003e$40,000.00\u003c\/div\u003e\n        \u003c\/div\u003e\n        \u003cdiv class=\"ir-result-card\"\u003e\n          \u003cdiv class=\"ir-result-label\"\u003eEnding value difference\u003c\/div\u003e\n          \u003cdiv class=\"ir-result-value ir-value-change\"\u003e$200,000.00\u003c\/div\u003e\n        \u003c\/div\u003e\n      \u003c\/div\u003e\n      \u003cdiv class=\"ir-formula\"\u003eInformation ratio = (portfolio return − benchmark return) ÷ tracking error\u003c\/div\u003e\n      \u003cdiv class=\"ir-visually-hidden\" aria-live=\"polite\" aria-atomic=\"true\"\u003e\u003c\/div\u003e\n    \u003c\/section\u003e\n  \u003c\/div\u003e\n\n  \u003csection class=\"ir-section ir-chart-card\" aria-labelledby=\"ir-chart-title\"\u003e\n    \u003cdiv class=\"ir-chart-head\"\u003e\n      \u003ch3 class=\"ir-chart-title\" id=\"ir-chart-title\"\u003eReturn comparison\u003c\/h3\u003e\n      \u003cp class=\"ir-chart-kicker ir-chart-kicker-live\"\u003eThe portfolio outperformed the benchmark by 2.00 percentage points.\u003c\/p\u003e\n    \u003c\/div\u003e\n    \u003cdiv class=\"ir-chart-cluster\"\u003e\n      \u003cdiv class=\"ir-plot-block\"\u003e\n        \u003cdiv class=\"ir-plot\" role=\"img\" aria-label=\"Bar chart comparing portfolio return, benchmark return, and excess return\"\u003e\u003c\/div\u003e\n        \u003cdiv class=\"ir-chart-empty\"\u003eEnter valid values above to see the return comparison.\u003c\/div\u003e\n      \u003c\/div\u003e\n      \u003cdiv class=\"ir-legend\" aria-label=\"Chart legend\"\u003e\u003c\/div\u003e\n    \u003c\/div\u003e\n    \u003cdiv class=\"ir-chart-table-wrap\"\u003e\n      \u003ctable class=\"ir-chart-table\"\u003e\n        \u003cthead\u003e\u003ctr\u003e\n\u003cth scope=\"col\"\u003eSeries\u003c\/th\u003e\n\u003cth scope=\"col\"\u003eReturn\u003c\/th\u003e\n\u003c\/tr\u003e\u003c\/thead\u003e\n        \u003ctbody class=\"ir-chart-summary-body\"\u003e\u003c\/tbody\u003e\n      \u003c\/table\u003e\n    \u003c\/div\u003e\n    \u003cdiv class=\"ir-chart-caption\"\u003eThe chart uses the same current-state figures shown in the result cards and exported workbook.\u003c\/div\u003e\n  \u003c\/section\u003e\n\n  \u003csection class=\"ir-section ir-table-card\" aria-labelledby=\"ir-detail-title\"\u003e\n    \u003ch3 class=\"ir-panel-title\" id=\"ir-detail-title\"\u003eCalculation detail\u003c\/h3\u003e\n    \u003cdiv class=\"ir-table-wrap\"\u003e\n      \u003ctable class=\"ir-table\"\u003e\n        \u003cthead\u003e\n          \u003ctr\u003e\n\u003cth scope=\"col\"\u003eStep\u003c\/th\u003e\n\u003cth scope=\"col\"\u003eInput A\u003c\/th\u003e\n\u003cth scope=\"col\"\u003eInput B\u003c\/th\u003e\n\u003cth scope=\"col\"\u003eResult\u003c\/th\u003e\n\u003c\/tr\u003e\n        \u003c\/thead\u003e\n        \u003ctbody class=\"ir-detail-body\"\u003e\u003c\/tbody\u003e\n      \u003c\/table\u003e\n    \u003c\/div\u003e\n    \u003cdiv class=\"ir-table-note\"\u003eReturns are calculated for one common measurement period. Cash flows, fees, and distributions should be reflected consistently in the portfolio values or supplied returns before using this simplified model.\u003c\/div\u003e\n  \u003c\/section\u003e\n\n  \u003csection class=\"ir-education\"\u003e\n    \u003ch2\u003eWhat does the information ratio estimate?\u003c\/h2\u003e\n    \u003cp\u003eThe information ratio, often abbreviated IR, evaluates active performance relative to a benchmark. It divides excess return by tracking error, so it answers a practical question: how much benchmark-relative return was earned for each unit of benchmark-relative variability? A positive ratio means the portfolio beat its benchmark over the measurement period. A negative ratio means it lagged. A larger positive value indicates that active return was high relative to the variability of that active return.\u003c\/p\u003e\n    \u003cp\u003eThe metric is most useful when the portfolio and benchmark are genuinely comparable and when return and tracking-error figures cover the same frequency and horizon. The U.S. Securities and Exchange Commission explains the role of market indexes and index funds in benchmark-based investing on \u003ca href=\"https:\/\/www.investor.gov\/introduction-investing\/investing-basics\/glossary\/index-fund\" target=\"_blank\" rel=\"noopener noreferrer\"\u003eInvestor.gov\u003c\/a\u003e. For a broader technical discussion of performance evaluation, see the \u003ca href=\"https:\/\/www.cfainstitute.org\/insights\/professional-learning\/refresher-readings\/2026\/portfolio-performance-evaluation\" target=\"_blank\" rel=\"noopener noreferrer\"\u003eCFA Institute\u003c\/a\u003e.\u003c\/p\u003e\n\n    \u003ch2\u003eHow should each input be entered?\u003c\/h2\u003e\n    \u003ch3\u003eBeginning portfolio value\u003c\/h3\u003e\n    \u003cp\u003eEnter the portfolio’s market value at the start of the evaluation period in U.S. dollars. It is required and must be greater than zero because the return formula divides by this value. A higher beginning value does not by itself improve the percentage return; it changes the dollar scale of the gain or loss. A common mistake is mixing a value measured before a large contribution with an ending value measured after that contribution. This simple calculator assumes the beginning and ending values already represent a consistent return measurement.\u003c\/p\u003e\n    \u003ch3\u003eEnding portfolio value\u003c\/h3\u003e\n    \u003cp\u003eEnter the market value at the end of the same period. It may be above, equal to, or below the beginning value. Raising this input increases portfolio return, excess return, and the information ratio, all else equal. If the portfolio paid distributions or received cash flows, use values or a separately calculated return that treats those flows correctly rather than interpreting a raw balance change as investment performance.\u003c\/p\u003e\n    \u003ch3\u003eBenchmark return\u003c\/h3\u003e\n    \u003cp\u003eEnter the total return of the relevant benchmark as a percentage. The benchmark should match the portfolio’s asset class, geography, style, and period as closely as practical. Increasing the benchmark return lowers excess return and the information ratio. Using a mismatched benchmark can make the result look artificially strong or weak. Benchmark return can be negative, but it must use the same period as the portfolio return.\u003c\/p\u003e\n    \u003ch3\u003eTracking error\u003c\/h3\u003e\n    \u003cp\u003eTracking error is the standard deviation of active returns: portfolio return minus benchmark return, usually calculated from a series of periodic observations and often annualized. Enter it as a positive percentage. A higher tracking error reduces the information ratio because the same excess return was achieved with less consistency. Zero tracking error makes the ratio undefined, so the calculator shows no finite IR in that case. Investor.gov provides a concise explanation of \u003ca href=\"https:\/\/www.investor.gov\/introduction-investing\/investing-basics\/glossary\/standard-deviation\" target=\"_blank\" rel=\"noopener noreferrer\"\u003estandard deviation\u003c\/a\u003e, while \u003ca href=\"https:\/\/www.investopedia.com\/terms\/i\/informationratio.asp\" target=\"_blank\" rel=\"noopener noreferrer\"\u003eInvestopedia\u003c\/a\u003e gives additional background on the information ratio.\u003c\/p\u003e\n\n    \u003ch2\u003eHow does the calculation work?\u003c\/h2\u003e\n    \u003cspan class=\"ir-code\"\u003ePortfolio return = (ending value − beginning value) ÷ beginning value\u003c\/span\u003e\n    \u003cspan class=\"ir-code\"\u003eExcess return = portfolio return − benchmark return\u003c\/span\u003e\n    \u003cspan class=\"ir-code\"\u003eInformation ratio = excess return ÷ tracking error\u003c\/span\u003e\n    \u003cp\u003eAll percentage calculations use decimal values internally. For example, a 10% portfolio return, an 8% benchmark return, and 5% tracking error produce a 2% excess return and an information ratio of 0.40. The ratio itself has no percent sign because it is one percentage divided by another.\u003c\/p\u003e\n\n    \u003ch2\u003eHow should the outputs be interpreted?\u003c\/h2\u003e\n    \u003cp\u003e\u003cstrong\u003ePortfolio return\u003c\/strong\u003e is the percentage change between the beginning and ending portfolio values. A positive result indicates growth; zero indicates no change; and a negative result indicates a decline. \u003cstrong\u003eExcess return\u003c\/strong\u003e is the portfolio return less the benchmark return. It is positive when the portfolio outperforms and negative when it underperforms.\u003c\/p\u003e\n    \u003cp\u003e\u003cstrong\u003eActive gain or loss\u003c\/strong\u003e translates excess return into dollars using the beginning portfolio value. It shows the approximate dollar difference between the portfolio’s ending value and the ending value implied by the benchmark return, under this simplified no-cash-flow setup. \u003cstrong\u003eEnding value difference\u003c\/strong\u003e is the raw dollar change from beginning to ending value, not a benchmark-relative measure.\u003c\/p\u003e\n    \u003cp\u003e\u003cstrong\u003eInformation ratio\u003c\/strong\u003e scales excess return by tracking error. A ratio near zero indicates little active return relative to active variability. A positive value indicates benchmark outperformance; a negative value indicates underperformance. There is no universal cutoff that fits every strategy, period, or market. Use the ratio alongside absolute return, drawdown, fees, holdings, and the appropriateness of the benchmark rather than treating it as a standalone verdict.\u003c\/p\u003e\n\n    \u003ch2\u003eHow should the chart and calculation table be used?\u003c\/h2\u003e\n    \u003cp\u003eThe return comparison chart places portfolio return, benchmark return, and excess return on one percentage scale. Bars extending above zero represent positive returns, while bars below zero represent negative values. The populated legend and chart data table repeat the exact figures represented by the bars. The calculation-detail table then shows the three linked steps: portfolio return, excess return, and information ratio.\u003c\/p\u003e\n    \u003cp\u003eScenario analysis is especially useful. Increasing ending value raises the active return. Increasing benchmark return reduces it. Increasing tracking error lowers the ratio without changing the underlying return difference. Reset clears the assumptions and removes the chart until valid, drawable data is entered again. Download Excel creates a workbook from the current state, making it easier to document assumptions and compare alternative cases.\u003c\/p\u003e\n\n    \u003ch2\u003eWhat are the main limitations and common mistakes?\u003c\/h2\u003e\n    \u003cul\u003e\n      \u003cli\u003eDo not compare a monthly portfolio return with an annual benchmark return or annualized tracking error unless all components have been converted consistently.\u003c\/li\u003e\n      \u003cli\u003eDo not calculate performance from raw beginning and ending balances when deposits, withdrawals, fees, or distributions materially affected the balance.\u003c\/li\u003e\n      \u003cli\u003eDo not select a benchmark merely because it is familiar; select one that represents the portfolio’s investable opportunity set and risk exposure.\u003c\/li\u003e\n      \u003cli\u003eDo not interpret a high ratio from a very short sample as proof of persistent skill. Tracking error and active return estimates can be unstable with limited data.\u003c\/li\u003e\n      \u003cli\u003eDo not use the information ratio as personalized investment advice. It is a descriptive performance metric, not a forecast or recommendation.\u003c\/li\u003e\n    \u003c\/ul\u003e\n  \u003c\/section\u003e\n\u003c\/div\u003e","brand":"FinancialModelsLab","offers":[{"title":"Default Title","offer_id":49909485011187,"sku":"information-ratio","price":0.0,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0522\/6191\/2762\/files\/information-ratio.webp?v=1783935460","url":"https:\/\/financialmodelslab.com\/products\/information-ratio","provider":"Financial Models Lab","version":"1.0","type":"link"}