Information Ratio (a.k.a Appraisal Ratio) shows the consistency of a fund manager in generating excess returns over the benchmark. It is measured by dividing the Mean Active return (Fund Return Benchmark Return) by the volatility of Active return. The volatility (or Standard Deviation) of Active return is called Tracking Error.
Information Ratio = Mean of (Portfolio Return – Benchmark Return) / Tracking Error
The higher the Information Ratio, the more consistent the fund manager is in generating excess returns.