Active return per unit of active risk: IR = dfracασ(R_p - R_b), where the denominator is tracking error. The Sharpe-equivalent for benchmark-relative strategies. Grinold's Fundamental Law of Active Management decomposes IR = IC· √(BR) — information coefficient (forecast skill) times the square root of breadth (number of independent bets) — explaining why broad systematic strategies can match concentrated discretionary skill with lower per-bet IC.