RT Journal Article SR Electronic T1 How “Informative” Is the Information Ratio for Evaluating Mutual Fund Managers? JF The Journal of Investing FD Institutional Investor Journals SP 67 OP 81 DO 10.3905/JOI.2010.19.1.067 VO 19 IS 1 A1 Thomas Bossert A1 Roland Füss A1 Philipp Rindler A1 Christoph Schneider YR 2010 UL https://pm-research.com/content/19/1/67.abstract AB This article aims to determine whether the information ratio (IR) is a useful and reliable performance measure to evaluate mutual fund managers. The authors use a dataset of nearly 10,000 mutual funds for the January 1998 to December 2008 period. The empirical results show that the IR varies over time and across different fund categories. The article finds that representing the true volatility in the return-generating process within a calendar year requires data with a higher frequency than monthly. This reference index or basket needs to capture a large proportion of the investment universe of the respective fund. Because the IR induces managers to hug the benchmark, it should be supplemented with, for example, the Active Share measure to control for the activity level in the portfolio. Finally, in order to separate lucky managers from skilled ones, the long-term track record is an important measure, because luck is generally not persistent over time.TOPICS: Manager selection, volatility measures, performance measurement