Fixed Income Manager Fees

The text says, “The evidence shows that fixed-income managers with the highest fees have the lowest information ratios. Fees are an important consideration in selecting any active manager, but the ratio of fees to alpha is usually higher for fixed income managers.” I’m wondering if this: a) implies markets are efficient/the most expensive managers are not always the best or b) this is literally (and more simply) just means that higher fees eat into any extra alpha from superb managers (i.e. it is not worth it) If the answer is b), then am I correct to assume that the return in the numerator of the information ratio is both after fees and after tax?

IMO it’s B. Higher fees can come from excessinve trading that eats up alpha or from higher mgmt fees as a result of overconfident managers.

ok any thoughts on if taxes and/or fees are included in the return that is in the numerator of the IR?

Both A and B are correct. Judging from the context of the statement, only fees are included, taxes are excluded.