What Is XIRR and How to Calculate Mutual Fund Returns Correctly: SIP Examples, Excel Steps and CAGR Differences

If you invest through monthly SIPs, the question "what return did I earn?" has no simple answer, because each instalment has been invested for a different time. XIRR solves this. It gives an annualised return that accounts for the exact dates and amounts of every cash flow. This guide explains how it works and how to calculate it yourself.

What XIRR means

XIRR stands for Extended Internal Rate of Return. It finds the single annual rate that makes the present value of all your investments equal to the present value of your final value or withdrawals, using actual dates. Investments are negative cash flows, and redemptions or the current value are positive.

Why not CAGR for SIPs?

CAGR assumes one lump sum invested at the start. For SIPs, money goes in over time, so the average money has been invested for much less than the full period. If you invested ₹10,000 a month for 3 years (₹3.6 lakh) and the value is ₹4.4 lakh, absolute gain is 22%, but the annualised XIRR is higher, near 13%. Dividing the gain by years or using CAGR from the first date would understate or misstate it. Learn the difference in our CAGR guide.

Worked example

You invested ₹60,000 over six months, and the portfolio is now worth ₹62,500. The absolute return is just 4.2%, but because the money has been invested for only a few months on average, the annualised XIRR is much higher, around 9%. This is why very short-period XIRR figures look dramatic and should not be extrapolated.

Calculating XIRR in Excel or Google Sheets

1. Enter dates in one column and cash flows in the next. Investments are negative and the final value is positive.
2. Use =XIRR(values, dates).
3. Format the result as a percentage.

The first cash flow must be an investment, and you need at least one positive and one negative value. Dates must be actual dates, not text. Or use the XIRR calculator directly.

Reading returns in your app

Most mutual fund platforms and the consolidated account statement (CAS) show XIRR for each holding and for the whole portfolio. Check whether the number is for the selected period, and whether it includes switches and dividends. Compare it with the benchmark for the same cash flows rather than with a different fund's point-to-point CAGR.

What is a good XIRR?

There is no universal number. Compare your XIRR with an appropriate benchmark index fund, with inflation, and with safe options such as fixed deposits. Over long periods, equity funds have delivered returns above inflation but with heavy swings. A strong figure over a bull market year says little about your fund selection. See mutual fund types and SIP vs lump sum.

Common mistakes

• Judging a fund by XIRR over a few months.
• Forgetting to include the final value as a positive cash flow.
• Mixing in withdrawals with the wrong sign.
• Using the same sign for all cash flows, which returns an error.
• Comparing XIRR with a fund's CAGR from a factsheet without noticing the difference in method.
• Ignoring exit loads and taxes. See tax guide.

When to use which measure

Plan your monthly amount with the SIP calculator and read the SIP guide to set realistic expectations.

Checking your app against your own sheet

Download your consolidated account statement, list each purchase date and amount, add the current value on today's date, and run the formula. If your answer differs from the app by more than a small margin, look for missed switches, dividends paid out, stamp duty or systematic withdrawals. Doing this once a year helps you trust the number you see. It also exposes how much of your return came from market movement rather than your own decisions, which is useful when judging whether to change funds or simply stay invested.

XIRR for lump sums and partial withdrawals

XIRR also handles lump sums with withdrawals. Suppose you invested ₹2,00,000 on 1 April 2022, added ₹1,00,000 on 1 October 2023, withdrew ₹50,000 on 1 April 2024, and the remaining value is ₹3,90,000 on 1 April 2025. Enter −2,00,000, −1,00,000, +50,000 and +3,90,000 with their dates. The result gives one annual rate across all of it, which a plain CAGR cannot do. If a fund pays dividends, include each payout as a positive entry on its date. Tax paid on redemption belongs in the sheet too if you want an after-tax figure. Keep the sheet saved yearly so you can see how your return evolves rather than relying on a single snapshot.

Frequently asked questions

What is XIRR?

An annualised return calculation that uses the exact dates and amounts of each cash flow.

Why use XIRR for SIPs?

Because each instalment is invested for a different duration.

How do I calculate XIRR in Excel?

Use =XIRR(values, dates) with investments as negative values.

Is XIRR the same as CAGR?

Only for a single lump sum with no other cash flows.

Why does my XIRR change daily?

Because it depends on the current value of your holdings.

Is a high short-term XIRR reliable?

No, short periods can exaggerate returns.

Last reviewed 8 November 2026. Rates, limits and rules change, so confirm figures with the official source before you act.