Risk-Adjusted Performance Evaluation of a Portfolio

John Smith is a portfolio manager overseeing a diversified equity portfolio for a large institutional client. Over the past year, his portfolio has returned 12%, whereas the benchmark index has returned 9%. The standard deviation of the portfolio's returns is 10%, while the standard deviation of the benchmark's returns is 8%. Additionally, the risk-free rate is currently at 3%.

Using this information, evaluate the performance of John’s portfolio by calculating the following risk-adjusted performance metrics: the Sharpe Ratio and the Information Ratio. Discuss what these metrics reveal about the portfolio's performance relative to the benchmark. Additionally, comment on any limitations of these metrics in evaluating performance.