XIRR vs CAGR vs Absolute Return: How to Read Your Real Mutual Fund Returns
Last updated: 13 October 2026
Quick answer (XIRR vs CAGR): Absolute return is the total percentage gain, ignoring time. CAGR is the yearly growth rate of a single investment held from one date to another. XIRR is the yearly rate for many cash flows on different dates, such as SIPs, top-ups and withdrawals. Use absolute return for under a year, CAGR for one-time investments and fund performance, and XIRR to judge your own SIP portfolio.
Last updated: 13 October 2026 Quick answer (XIRR vs CAGR): Absolute return is the total percentage gain, ignoring time. CAGR is the yearly growth rate of a single investment held from one date to another. XIRR is the yearly rate for many cash flows on different dates, such as SIPs, top-ups and withdrawals. Use absolute return for under a year, CAGR for one-time investments and fund performance, and XIRR to judge your own SIP portfolio. Key takeaways Absolute return: ₹1 lakh growing to ₹1.6 lakh is 60%, whether it took 2 years or 6. CAGR: the same 60% is 26.5% a year over 2 years but only 8.1% over 6 years. XIRR for SIPs: a 3-year ₹10,000 SIP worth ₹4.5 lakh shows 25% absolute but 15.0% XIRR. Excel: =XIRR(values, dates), with investments negative and current value positive. Timing matters: the same 20% gain can be an XIRR of 10.9% or 15.5% depending on when money went in. Open any investment app and you will see a big green number: "Returns +42%". Your colleague's portfolio shows "XIRR 14.2%". The fund factsheet says "5-year CAGR 16.8%". All three are correct, and all three measure different things. Mixing them up is one of the most common reasons Indian investors misjudge how well, or how badly, their money is doing. This guide explains XIRR vs CAGR vs absolute return in plain language, with formulas, rupee examples and a step-by-step Excel and Google Sheets walkthrough. It also covers rolling returns, the measure that tells you how consistent a fund has been, as of October 2026. Comparison of absolute return, CAGR and XIRR and when to use each measure What is absolute return? Absolute return is the simple percentage gain or loss on your investment, without considering how long it took. It is also called point-to-point or total return. Absolute return = (Current value − Amount invested) ÷ Amount invested × 100 If you invested ₹1,00,000 and it is now worth ₹1,60,000, your absolute return is 60%. That number is the same whether the growth took two years or six. That is its weakness: 60% in two years is excellent, while 60% in six years is roughly what a mix of FDs might have delivered. Absolute return is useful for holding periods under one year. Annualising a short period can exaggerate wildly: a 3% gain in one month compounds to an "annualised" 43% a year, which no one should expect to repeat. What is CAGR and how is it calculated? CAGR, or compound annual growth rate, is the constant yearly rate at which an investment would have grown from its starting value to its ending value. It smooths out the ups and downs into one annual figure. CAGR = (Ending value ÷ Beginning value) 1 ÷ years − 1 Applying this to our ₹1 lakh to ₹1.6 lakh example shows why time matters: Time taken to grow ₹1 lakh to ₹1.6 lakh Absolute return CAGR 2 years 60% 26.5% a year 4 years 60% 12.5% a year 6 years 60% 8.1% a year CAGR is the right measure when there is one investment and one valuation date, such as a lump sum or a fund's NAV over a period. Fund factsheets and AMC websites typically show one-, three- and five-year returns on a compounded annualised basis. The catch: CAGR assumes all money went in on day one. The moment you add money at different times, as in a SIP, CAGR gives the wrong answer. What is XIRR in mutual funds? XIRR, or extended internal rate of return, is the single annual rate that makes the present value of all your cash flows, investments, withdrawals and current value, equal to zero. Put simply, it is the CAGR of a portfolio where money comes in and goes out on different dates. Each rupee is weighted by how long it was invested. A ₹10,000 SIP instalment made three years ago has had three years to grow; last month's instalment has had one month. XIRR accounts for this, which is why it is the standard way to measure SIP returns. When all money goes in on a single day and comes out on a single day, XIRR and CAGR give the same result. The underlying equation is: Σ Cash flow i ÷ (1 + XIRR) (d i − d 0 ) ÷ 365 = 0 Here d i is the date of each cash flow and d 0 the first date. There is no direct formula, so spreadsheets solve it by trial and error. Some apps call the result "annualised return" or "IRR", but it is the same idea. XIRR vs CAGR for SIP returns: why the difference matters Take a ₹10,000 monthly SIP from October 2023 to September 2026, 36 instalments totalling ₹3.6 lakh. On 5 October 2026 the portfolio is worth ₹4.5 lakh. Absolute return: (4.5 − 3.6) ÷ 3.6 = 25%. CAGR applied wrongly: treating ₹3.6 lakh as if invested three years ago gives (4.5 ÷ 3.6) 1/3 − 1 = 7.7% a year. XIRR: 15.0% a year, because the average rupee was invested for only about 18 months. XIRR vs CAGR vs absolute return for the same 3-year SIP showing 25%, 7.7% and 15% The "wrong CAGR" understates this SIP's performance by half. Many investors who compare a SIP's absolute gain with an FD rate make the same mistake and wrongly conclude that equity "did not work". Our step-up SIP guide (/insights/step-up-sip-calculator-guide) and SIP planning guide (/insights/sip-planning-guide-india) both rely on XIRR-style maths for this reason. Does the timing of your investments change XIRR? Yes, significantly. Consider three investors who each put ₹2 lakh into the same fund in two instalments, on 1 October 2024 and 1 October 2025, and each hold ₹2.4 lakh on 1 October 2026. Their absolute return is identical at 20%. Their XIRR is not. Investor Oct 2024 Oct 2025 Value Oct 2026 Absolute XIRR A ₹1,50,000 ₹50,000 ₹2,40,000 20% 10.9% B ₹1,00,000 ₹1,00,000 ₹2,40,000 20% 12.8% C ₹50,000 ₹1,50,000 ₹2,40,000 20% 15.5% Chart showing how timing of cash flows changes XIRR even when absolute return is the same Investor C earned the same rupee gain with most of the money invested for only one year, so C's money worked hardest. XIRR captures exactly this. It also explains why your personal XIRR can differ from the fund's published CAGR even when you hold the same fund. How to calculate XIRR in Excel or Google Sheets Both Excel and Google Sheets have a built-in XIRR function with the same syntax: =XIRR(values, dates, [guess]) . Values and dates must be ranges of equal length, there must be at least one negative and one positive value, and the guess is optional. Four steps to calculate XIRR in Excel or Google Sheets for a SIP Here is a small worked example: a ₹10,000 SIP on the 5th of each month from January to June 2026, valued at ₹63,500 on 5 October 2026. Row A: Date B: Amount (₹) Note 2 05-01-2026 −10,000 SIP instalment 3 05-02-2026 −10,000 SIP instalment 4 05-03-2026 −10,000 SIP instalment 5 05-04-2026 −10,000 SIP instalment 6 05-05-2026 −10,000 SIP instalment 7 05-06-2026 −10,000 SIP instalment 8 05-10-2026 +63,500 Current value In cell B10, type =XIRR(B2:B8, A2:A8) and format it as a percentage. The answer is 11.0% . Absolute return on the same data is only 5.8%, because the money has been invested for an average of about six months. Follow these steps for your own portfolio: Get the cash flows: download your Consolidated Account Statement (CAS) from CAMS (https://www.camsonline.com/Investors/Statements/Consolidated-Account-Statement) or KFintech, or view all folios on MFCentral (https://www.mfcentral.com/) . Our CAS guide (/insights/consolidated-account-statement-cas-guide) explains each section. Enter dates in column A in a format your spreadsheet recognises as a date, not text. Enter amounts in column B: purchases, SIPs and switch-ins as negatives; redemptions, SWPs and IDCW payouts received as positives. Add the current value as the last row, with today's date, as a positive number. Apply =XIRR() across both columns and format as a percentage. Common XIRR errors and how to fix them #NUM! error: usually all values have the same sign. Check that investments are negative and the current value positive. Rarely, a different guess such as 0.05 helps. #VALUE! error: one or more dates are stored as text. Re-enter them or use the DATE function. Strange results for short periods: XIRR annualises, so a portfolio under a year old can show extreme numbers. Use absolute return until you cross 12 months. Forgetting withdrawals: leaving out an SWP or partial redemption understates your true return. Worked example with a withdrawal Suppose you invested ₹1,00,000 on 15 April 2024 and ₹50,000 on 10 January 2025, withdrew ₹30,000 on 20 June 2025, and the holding is worth ₹1,45,000 on 13 October 2026. The quick calculation, total received ₹1.75 lakh against ₹1.5 lakh invested, suggests 16.7%. XIRR shows the true annual return is about 7.9%, because the gain was earned over roughly two and a half years. That is a modest result for equity and worth a closer look at the fund. Which return measure should you use? Situation Best measure Why Any holding under 1 year Absolute return Annualising short periods exaggerates One lump sum, no further flows CAGR (equals XIRR) Single start and end value Comparing two funds' performance CAGR and rolling returns Removes the effect of your personal timing Your SIP or STP portfolio XIRR Handles many dated cash flows Portfolio with withdrawals or SWP XIRR Counts money taken out Endowment or insurance plan XIRR / IRR Premiums paid over years; see our endowment IRR guide (/insights/guaranteed-return-endowment-plan-real-irr) The key distinction is between the fund's return and your return. CAGR is the industry's time-weighted measure, which shows how the fund manager performed regardless of when investors bought. XIRR is money-weighted: it shows how your rupees performed, including the effect of your timing. Why your XIRR may be lower than your fund's CAGR If you add money after a rally and pause during a fall, your XIRR can trail the fund's own return. Morningstar's Mind the Gap 2026 (https://www.morningstar.com/lp/mind-the-gap) study of US funds found investors earned 8.7% a year over the ten years to December 2025, against 9.9% for the funds themselves. That gap of about 1.2 percentage points a year came from the timing and size of investors' purchases and sales. There is no Indian study with identical methodology, but the lesson travels well. Stopping a SIP in a correction, as discussed in should you stop your SIP when markets fall (/insights/should-you-stop-sip-when-markets-fall) , is the classic way to widen the gap. What are rolling returns and why do they matter? A single CAGR depends heavily on its start and end dates. A five-year return measured from a market bottom looks spectacular; the same fund measured from a peak can look poor. Rolling returns solve this by calculating, say, every possible five-year CAGR over a long period, one starting each day or month, and then showing the average, the range and how often returns crossed a threshold. For example, a fund's rolling three-year returns might show it delivered above 10% in most periods, with a worst period near zero. That tells you far more about consistency than any single number. You can compute rolling returns for index data downloaded from NSE Indices (https://www.niftyindices.com/reports/historical-data) , which publishes total return index values. Our guide to rolling returns, Sharpe ratio and standard deviation (/insights/rolling-returns-sharpe-ratio-explained) goes deeper, and how to shortlist SIP funds (/insights/how-to-shortlist-sip-funds-2026) shows how to use them in fund selection. Five mistakes investors make when reading returns Comparing absolute return with an FD rate. A 40% gain over five years is about 7% a year, not 40%. Using CAGR for a SIP. It understates returns, sometimes by half. Annualising a few months. A 6% gain in three months is not a 26% a year fund. Ignoring tax and costs. XIRR on your statement is pre-tax. See capital gains tax on mutual funds in 2026 (/insights/capital-gains-tax-mutual-funds-2026) . Judging a fund by your XIRR alone. Your timing affects XIRR. Compare funds on CAGR and rolling returns over the same periods. Related reading Rolling Returns, Sharpe Ratio and Standard Deviation Made Simple (/insights/rolling-returns-sharpe-ratio-explained) How to Read a Mutual Fund Factsheet (/insights/how-to-read-mutual-fund-factsheet) Step-Up SIP Calculator Guide (/insights/step-up-sip-calculator-guide) SIP vs Lumpsum vs STP (/insights/sip-vs-lumpsum-vs-stp) 7 Signs Your Mutual Fund Portfolio Needs a Review (/insights/signs-your-mutual-fund-portfolio-needs-a-review) Frequently Asked Questions What is a good XIRR for a mutual fund SIP? There is no fixed benchmark. Compare your XIRR with the XIRR of an equivalent SIP in the fund's benchmark index over the same dates, and with inflation plus a margin. Over five years or more, an equity SIP that beats a comparable index SIP is doing its job. Short-term XIRR swings widely and should not drive decisions. Is XIRR the same as CAGR? Only when there is one investment and one valuation. XIRR generalises CAGR to many cash flows on different dates. For a lump sum held without top-ups or withdrawals, both give the same answer. For SIPs, STPs and SWPs, only XIRR gives the correct annual rate. Why is my XIRR negative when my absolute return is positive? This should not normally happen with a positive absolute return, so check your data. Common causes are a dividend or withdrawal entered with the wrong sign, a missing current value, or dates stored as text. If the portfolio is very new, small gains or losses can also produce erratic XIRR figures. Why does my XIRR show 50% or more? XIRR annualises returns. If your portfolio is only a few months old, a modest gain can translate into a very high annual figure. A 3% gain in one month annualises to about 43%. Use absolute return for holdings under one year and wait for a longer period before reading XIRR. Does XIRR include dividends? Only if you include them. For IDCW payouts received in your bank account, enter each as a positive cash flow on the date received. For growth options or reinvested dividends, nothing extra is needed because the value is already in the NAV. Missing payouts will understate your true XIRR. Which is better for comparing two mutual funds, XIRR or CAGR? CAGR and rolling returns over identical periods. Your personal XIRR mixes the fund's performance with your timing, so two investors in the same fund can have different XIRRs. To judge the fund itself, compare its trailing and rolling CAGR against its benchmark and category peers. Where can I find my portfolio XIRR? Many platforms and distributor apps calculate it automatically from your transactions. You can also download your CAS from CAMS or KFintech and compute XIRR in Excel or Google Sheets using the method above. Check that the calculation includes all folios, withdrawals and payouts. Sources: Morningstar, Mind the Gap 2026 (https://www.morningstar.com/lp/mind-the-gap) ; NSE Indices historical and TRI data (https://www.niftyindices.com/reports/historical-data) ; CAMS Consolidated Account Statement (https://www.camsonline.com/Investors/Statements/Consolidated-Account-Statement) ; MFCentral (https://www.mfcentral.com/) ; AMFI Monthly data (https://www.amfiindia.com/research-information/amfi-monthly) . Worked examples are Money n Wealth calculations using hypothetical cash flows; XIRR computed on a 365-day basis, as in Excel and Google Sheets. Want to know your portfolio's real XIRR? We can consolidate every folio, compute your true return and compare it with the right benchmarks. Talk to Money n Wealth (/contact) for a free portfolio review. This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
What is a good XIRR for a mutual fund SIP?
There is no fixed benchmark. Compare your XIRR with the XIRR of an equivalent SIP in the fund's benchmark index over the same dates, and with inflation plus a margin. Over five years or more, an equity SIP that beats a comparable index SIP is doing its job. Short-term XIRR swings widely and should not drive decisions.
Is XIRR the same as CAGR?
Only when there is one investment and one valuation. XIRR generalises CAGR to many cash flows on different dates. For a lump sum held without top-ups or withdrawals, both give the same answer. For SIPs, STPs and SWPs, only XIRR gives the correct annual rate.
Why is my XIRR negative when my absolute return is positive?
This should not normally happen with a positive absolute return, so check your data. Common causes are a dividend or withdrawal entered with the wrong sign, a missing current value, or dates stored as text. If the portfolio is very new, small gains or losses can also produce erratic XIRR figures.
Why does my XIRR show 50% or more?
XIRR annualises returns. If your portfolio is only a few months old, a modest gain can translate into a very high annual figure. A 3% gain in one month annualises to about 43%. Use absolute return for holdings under one year and wait for a longer period before reading XIRR.
Does XIRR include dividends?
Only if you include them. For IDCW payouts received in your bank account, enter each as a positive cash flow on the date received. For growth options or reinvested dividends, nothing extra is needed because the value is already in the NAV. Missing payouts will understate your true XIRR.
Which is better for comparing two mutual funds, XIRR or CAGR?
CAGR and rolling returns over identical periods. Your personal XIRR mixes the fund's performance with your timing, so two investors in the same fund can have different XIRRs. To judge the fund itself, compare its trailing and rolling CAGR against its benchmark and category peers.
Where can I find my portfolio XIRR?
Many platforms and distributor apps calculate it automatically from your transactions. You can also download your CAS from CAMS or KFintech and compute XIRR in Excel or Google Sheets using the method above. Check that the calculation includes all folios, withdrawals and payouts.
Want to know your portfolio's real XIRR?
We can consolidate every folio, compute your true return and compare it with the right benchmarks. Talk to Money n Wealth for a free portfolio review.
