What Is XIRR? Calculate Your Actual Mutual Fund SIP Returns Accurately
Why CAGR Doesn't Work for SIP
CAGR works for lump sums. For SIPs with monthly investments at different NAVs, you need XIRR (Extended Internal Rate of Return).
Calculate XIRR in Excel or Google Sheets
List all SIP investments as negative values (money going out). Add current portfolio value as last row, positive. Use: =XIRR(values, dates)
| Date | Amount |
|---|---|
| 01-Jan-2022 | -5000 |
| 01-Feb-2022 | -5000 |
| 01-Mar-2022 | -5000 |
| 01-Jan-2025 (current value) | +2,10,000 |
If result is 0.1456, your XIRR = 14.56%.
XIRR vs CAGR vs Absolute Return
| Metric | Best For | Limitation |
|---|---|---|
| Absolute Return | Quick check | Ignores time |
| CAGR | Lump sum | Misleading for SIPs |
| XIRR | SIPs, irregular investments | Needs date data |
The misleading app return: Started SIP in Jan 2022 (market peak), crashed 30% then recovered, app shows 4% absolute return. XIRR may show 10%+ because you bought cheap monthly. XIRR is the truth.
What Is a Good XIRR?
- 8-10% XIRR: Similar to FD + slight premium
- 10-14% XIRR: Good, beating inflation significantly
- 14-18% XIRR: Very good, mid/small-cap performance
- 18%+ XIRR: Exceptional
Frequently Asked Questions
What is a good XIRR for SIP in India?
10-14% XIRR for 10+ year equity SIP is excellent. Large-cap index funds historically deliver 10-12% XIRR. Mid/small-cap: 14-18%+ with higher volatility.
How is XIRR different from returns shown in apps?
Apps show point-to-point returns comparing NAV on a specific past date to today. This is not your return if you did SIP. Use XIRR on your transaction history for accurate personal returns.
Can XIRR be negative?
Yes. If markets fell significantly since you started and losses outweigh gains, XIRR will be negative. A negative XIRR doesn't mean your fund is bad — it may mean you started at a market peak and haven't held long enough.