Evaluating the performance of investment portfolios using the information ratio

Abstract

The study aimed to identify the information ratio as a tool for evaluating investment portfolios and identify the way to calculate it, while the problem of the study was that the majority of investors did not realize the importance of using methods to evaluate the performance of their investment portfolios or do not have the necessary scientific capabilities to use those methods, and to reach the results of this study, I used the descriptive analytical approach, and the study relied on the approved websites on the internet to obtain the data processed using my program (Excel, Minitab), The study found that the rate of excess returns measures the extent to which the fund manager can generate returns in excess of the standard indicator, and that the information ratio measures the value of excess returns compared to the risk rate, and the higher the rate of excess returns, the more there is a chance to be high performance if it is reconciled with the risk rate, in addition, negative values of the rate of excess returns leads to negative information ratios, which means low performance for portfolio managers.