Recruiter's Glossary

Examples: Mutual Fund • Yield Curve • Venture Capital

Information Ratio

Term from Investment Management industry explained for recruiters

The Information Ratio is a way to measure how well an investment manager performs compared to their benchmark (like the S&P 500). Think of it as a report card that shows if a manager is consistently making better returns than the market average. It helps employers identify professionals who are skilled at picking investments and managing portfolios. This measurement is similar to other performance tools like the Sharpe Ratio or Treynor Ratio, but specifically focuses on measuring an investment manager's skill in beating their chosen market benchmark.

Examples in Resumes

Achieved Information Ratio of 1.2 while managing $500M equity portfolio

Improved portfolio Information Ratio from 0.3 to 0.8 through enhanced stock selection

Led team to consistently maintain positive Information Ratio across multiple market cycles

Typical job title: "Portfolio Managers"

Also try searching for:

Investment Manager Portfolio Manager Quantitative Analyst Investment Analyst Fund Manager Asset Manager Risk Manager

Where to Find Portfolio Managers

Professional Organizations

Online Communities

Job Boards

Example Interview Questions

Senior Level Questions

Q: How do you use Information Ratio in portfolio construction?

Expected Answer: Should explain how they use it to evaluate investment decisions, balance risk and return, and make portfolio adjustments. Should mention practical examples of using it to improve portfolio performance.

Q: Describe a time when the Information Ratio helped you make a key investment decision.

Expected Answer: Should provide a specific example of using the metric to either maintain or change investment strategy, showing understanding of its practical application in real-world scenarios.

Mid Level Questions

Q: What factors can affect the Information Ratio?

Expected Answer: Should discuss market conditions, investment style, benchmark selection, and portfolio management decisions that can impact the ratio.

Q: How do you explain Information Ratio to clients?

Expected Answer: Should demonstrate ability to explain complex concepts in simple terms, focusing on how it helps measure investment success against goals.

Junior Level Questions

Q: What is the Information Ratio and why is it important?

Expected Answer: Should explain that it measures investment performance against a benchmark and helps evaluate manager skill in simple terms.

Q: What's a good Information Ratio?

Expected Answer: Should know that generally, an IR above 0.5 is good, above 1.0 is excellent, and explain this shows consistent outperformance of the benchmark.