What is XIRR?
XIRR (Extended Internal Rate of Return) is the most accurate way to measure the annualised return of an investment that involves multiple cash flows at irregular dates โ like a monthly SIP, partial redemptions, or lumpsum investments at different times. Unlike CAGR, which assumes a single investment at the start, XIRR accounts for the exact dates and amounts of every transaction.
How is XIRR Calculated?
XIRR finds the rate (r) that makes the Net Present Value (NPV) of all cash flows equal to zero, solved iteratively using the Newton-Raphson method.
XIRR Calculation Example
Suppose you invested โน10,000/month for 36 months (3 years) and your current portfolio value is โน4,50,000:
XIRR vs CAGR vs Absolute Return
CAGR is only accurate for a single lumpsum investment held to maturity. Absolute Return (total gain %) ignores the time period completely. XIRR is the only metric that correctly accounts for multiple investments at different dates โ making it the industry standard for measuring SIP and mutual fund portfolio performance.
Who Uses XIRR?
Mutual fund investors checking real SIP performance, financial advisors comparing portfolio returns, investors with irregular investments or partial redemptions, and anyone wanting to compare their returns fairly against index benchmarks. Most mutual fund apps like Zerodha Coin, Groww, and Kuvera show XIRR as the primary return metric.
What is a Good XIRR?
For equity mutual fund SIPs over 5+ years: 12โ18% XIRR is considered good. Large-cap/Nifty index funds typically deliver 11โ13% XIRR. Mid-cap and small-cap funds can deliver 14โ18% over long periods. Anything consistently above 20% is exceptional. Negative XIRR is normal during market downturns and typically recovers over 3โ5 years.
Related Calculators
To plan future SIP returns, use our SIP Calculator. Compare regular vs step-up investing with our Step-Up SIP Calculator. For lumpsum investment returns, use our Lumpsum Calculator.