Why SIPs need XIRR, not CAGR
CAGR assumes one lump sum invested once. A SIP is many small investments on many different dates, so your first instalment compounds for years while your latest one has been invested for weeks. Averaging the returns would be misleading. XIRR solves this by finding the single annualised rate that makes the present value of every cash flow (each instalment paid out, plus the final value received) net to zero.
How to read it
- Treat money you put in as negative cash flows and the current value as a positive cash flow.
- XIRR weights each rupee by how long it was actually invested.
- A SIP XIRR of 12% means your contributions, on average and date-weighted, grew at 12% annually.
Practical notes for Indian investors
XIRR is what your broker or AMC statement shows for SIP performance. It is also handy for irregular top-ups, switches, and partial redemptions. Spreadsheets compute it with the XIRR() function. FindMF reports lump-sum CAGR from published NAVs; for your own SIP, plug your dated instalments into an XIRR calculation. We take no commission on anything. Browse funds by category to compare track records.