XIRR
Return when money moved at different times
Worked example
Using the default values, xirr gives a xirr of 8.01%.
| Item | Value |
|---|---|
| Cashflows | 3 |
| Total put in | ₹2,00,000 |
| Total taken out or current value | ₹2,30,000 |
| Gain | ₹30,000 |
| Absolute return | 15.0% |
| Period | 2.3 years |
| XIRR | 8.01% a year |
| A 7% FD would have given | 7.0% |
| You beat it by | 1.01% |
What you need
- Cashflows
Questions
Why is my SIP return lower than the fund’s advertised return?
The fund quotes CAGR from a single start date. Your instalments each had a different holding period, so the later ones contributed less. XIRR reflects what you actually earned.
Which amounts are negative?
Anything leaving your pocket — purchases and instalments. Redemptions, dividends and the current value are positive. Getting the signs the wrong way round is the usual reason for an odd result.
Important
XIRR is the annualised return that makes the present value of every cashflow net to zero, which is the correct measure when money went in and out at different dates — a SIP, a portfolio with top-ups, or a business with staggered outflows. CAGR assumes one entry and one exit and will mislead here. This is the same calculation as the XIRR function in Excel.