What is XIRR and how is it different from CAGR?

XIRR (Extended Internal Rate of Return) is the annualised return for investments with multiple cash flows on different dates. CAGR works only for a single lump sum (one start value, one end value). SIPs have 12, 36, or 120 separate instalments on different dates — XIRR handles all of them and gives the true annualised return. Most mutual fund apps report returns as XIRR.

How is XIRR calculated mathematically?

XIRR solves for rate r in the equation: Σ [Cash Flow_i ÷ (1 + r)^(Days_i ÷ 365)] = 0, where each cash flow has its actual date. Investments are negative (money leaving your pocket), redemptions are positive (money returning). The Newton-Raphson iteration method solves this numerically since there is no closed-form solution.

What is a good XIRR for a mutual fund SIP in India?

For equity mutual funds over 5–10 years: XIRR of 12–15% is good. Nifty 50 index fund SIPs have delivered 11–13% XIRR over most 10-year periods. Mid cap fund SIPs: 13–16% XIRR over long periods. Small cap: 13–18% XIRR but highly variable. Any equity fund SIP below 10% XIRR over 10 years has underperformed index funds.

Why does the XIRR show a negative value?

XIRR shows negative return when the current redemption value is less than total invested. This happens when markets are down (mark-to-market loss), when the SIP tenure is too short (less than 2–3 years for equity), or if the fund itself has genuinely underperformed. A temporary negative XIRR on an ongoing SIP is normal during market corrections — it typically recovers with time.

True Return · Newton-Raphson XIRR

XIRR Calculator

CAGR only works for lump sum investments. For SIPs with multiple instalments, partial redemptions, or irregular cash flows, XIRR is the only accurate measure of your actual annualised return.

📚 Understand This Calculator

XIRR: the only return number that tells you the truth about your SIP

When your mutual fund app shows "Returns: 14.5%," do you know what that actually means? Probably not — because that number is often misleading for SIP investors. CAGR works perfectly for a fixed deposit: money goes in once, sits untouched, comes out. But SIPs put in money every month, on different dates. Each rupee has been invested for a different amount of time. XIRR is the only metric that handles this correctly.

🇮🇳 Real-Life Example

Vikram ran a ₹10,000/month SIP for exactly 3 years. Total invested: ₹3,60,000. Current value: ₹4,80,000.

📌 Naive calculation: Gain of ₹1,20,000 on ₹3,60,000 = 33.3% total. "Not bad," Vikram thinks.

📌 But his first ₹10,000 instalment was invested 36 months ago. His last ₹10,000 was invested just 1 month ago. The first rupee worked 36x as long as the last. A flat "33.3%" doesn't reflect this at all.

📌 XIRR calculates the true annual return accounting for every date: 19.2% CAGR — which is actually excellent.

Without XIRR, Vikram might have calculated 33.3%/3 years = 11.1% annualised — a completely wrong number. XIRR gives the honest answer.

💡 The Key Insight

Compare your XIRR to the comparable FD rate. If your equity fund XIRR over 5 years is only 7–8%, you'd have been better off in a fixed deposit — with less risk. XIRR below 10–11% for an equity fund held over 5+ years is a signal to review the fund. XIRR above 14% over 5 years is genuinely excellent.

⚠️ Common Mistake

Entering cash flows with wrong signs. In XIRR convention: money you invest (going out of your pocket) is negative. Money you receive (redemptions, current value) is positive. Getting this backwards gives completely wrong results. This calculator handles the sign convention automatically — just enter your SIP amount and it sets the signs correctly.

📊 Cash Flow Entry

Manual Entry

SIP Generator

Convention: Investments (money out) = Negative (−). Redemptions / current value (money in) = Positive (+). Add your current portfolio value as the last entry with today's date as a positive amount.

#	Date	Amount (₹)	Type

XIRR vs CAGR vs Absolute Return

Metric	Use For	Limitation
XIRR	SIPs, irregular cash flows, portfolios with multiple buys/sells	Requires dates for each cash flow
CAGR	Single lump sum investment with known start & end value	Incorrect for SIPs — overstates returns
Absolute Return	Quick snapshot of total gain/loss percentage	Not annualised — misleading for different time periods

Frequently Asked Questions

Why is my XIRR much lower than the fund's published return? ▾

Fund returns are reported as point-to-point CAGR — what ₹1 lakh invested 5 years ago would be worth today. Your XIRR accounts for the timing of each SIP instalment: early instalments grew for longer, later ones for shorter periods. In a rising market, XIRR is typically lower than point-to-point CAGR because most of your capital was invested recently. In a falling market, the opposite can be true.

What should I enter as my "current value" cash flow? ▾

Enter the current market value of your entire holding as a positive cash flow with today's date. You have NOT actually redeemed — this is a hypothetical redemption to calculate your return as of today. If you've actually redeemed, enter the actual redemption amount on the actual date. For ongoing SIPs, add one row: today's date + positive current portfolio value.

What is a good XIRR for an equity mutual fund SIP? ▾

For SIPs running over 5+ years in equity funds: XIRR above 12% is good, above 15% is excellent. For 3-year SIPs: above 10% is solid. Note that XIRR fluctuates significantly based on market conditions at the time you measure — an XIRR calculated at a market peak will look very different from one calculated in a downturn. Always evaluate over complete market cycles.

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Track Your Real Returns on BullWiser

BullWiser's Portfolio Analyser computes XIRR automatically from your actual transaction history — no manual entry needed.