what is the difference between information ratio and tracking error 
an information ratio will inform an investor if the portfolio manager or investment is generating enough returns in comparison to the risk taken a tracking error will inform how much the investment s returns deviate from the benchmark can an information ratio be negative yes an information ratio can be negative if the investment is returning below the benchmark then the information ratio will be negative the bottom linethe information ratio can be used to determine the effectiveness of a portfolio manager and whether the manager can continuously outperform a specific benchmark this can help investors choose where to allocate their capital specifically in deciding whether it is better to invest in a specific actively managed fund or if a passively managed fund would be a better option particularly since passively managed funds have lower expense ratios 