XIRR for SIPs: what it is and how to read it

• ₹5,000 invested on the 5th of every month from January to December 2025: ₹60,000 in total.
• On 5 January 2026 the units are worth ₹64,500, a gain of ₹4,500.
• Absolute return: ₹4,500 ÷ ₹60,000 = 7.5%.
• XIRR: 14.1% a year.

Your first instalment was invested for 12 months, your last for just one. On average your money was invested for only about 6.5 months, so earning ₹4,500 in that time is the same as earning roughly 14.1% a year.

XIRR finds that yearly rate exactly: the rate at which every instalment, each growing from its own date, adds up to ₹64,500 on the valuation date. It's the measure fund houses and AMFI use for SIP returns, and the same calculation as Excel's XIRR function.

CAGR assumes all your money went in on day one. Applied to this SIP it gives 7.5%, which understates the return because most of the money wasn't invested for the whole year. CAGR is right for a single lump sum; for SIPs, top-ups or withdrawals, use XIRR.

That's also why your SIP's XIRR rarely matches the return a fund advertises: the factsheet shows a lump-sum return over a fixed period, while your XIRR depends on when your own instalments went in.

• Give it time. XIRR turns any period into a yearly rate, so a few months' returns can look extreme. Quantfolio shows the plain absolute return until your first investment is a year old, then switches to XIRR.
• Compare like with like. The fair benchmark is what the same rupees, on the same dates, would have earned in an index. Quantfolio shows that next to your XIRR.
• Withdrawals count too. Money you take out is a positive cash flow on the day you took it, and dividends paid to you are part of your return.

Enter your instalments in the free XIRR calculator, or in Excel with =XIRR(amounts, dates) (investments as negative amounts, today's value as the last positive one). Or import your mutual fund statement and Quantfolio works it out for every fund and your whole portfolio.