| Getting Information from Ratios and Coefficients There is an on-going debate in the investment world on whether excess returns can be routinely harvested by managers. On one corner are academicians and investors who claim there is no alpha in the markets and index funds are the most efficient and economic way to invest. To this group, information ratios and information coefficients are meaningless alchemy since no manager can systematically beat the market. On the opposite corner are active managers and investors who believe that inefficiencies in the market can be profitably exploited through specific strategies. To this group, instead, information ratios and information coefficients are the standard of measure. |
