What is XIRR in mutual funds?
XIRR means Extended Internal Rate of Return. It measures the annualised return of an investment when money is invested or withdrawn on different dates. This makes XIRR especially useful for SIPs, mutual funds, stock portfolios, real estate cash flows and investments with irregular transactions.
How XIRR is calculated
XIRR calculates the rate at which the net present value of all cash flows becomes zero. Investments are treated as negative cash flows. Withdrawals, redemptions and current portfolio value are treated as positive cash flows. The exact date of each transaction is used to calculate the time difference in years.
Formula concept
NPV = Σ Cash Flow / (1 + XIRR)^t = 0. The calculator solves this equation through iteration. It is not a simple average return formula. That is why XIRR can handle SIPs and irregular investments better than CAGR.
XIRR vs CAGR vs IRR
| Feature | XIRR | CAGR | IRR |
|---|---|---|---|
| Exact dates | Yes | No | No |
| SIP support | Best | Weak | Medium |
| Irregular cash flows | Yes | No | Periodic only |
| Best use | SIP, portfolio | Lump sum | Regular projects |
SIP example
If you invest ₹5,000 every month for one year and the final value becomes ₹80,000, XIRR shows the annualised return based on each monthly date. CAGR cannot do this accurately because CAGR assumes one starting value and one ending value.
Test case for accuracy
A basic validation test is: January 1, 2020 cash flow -₹10,000 and January 1, 2021 cash flow +₹12,000. The expected XIRR is close to 20%. This calculator includes a one-click test button for that case.
When to use XIRR
- Mutual fund SIP return calculation.
- Stock portfolio with multiple buys and sells.
- Real estate investment cash flows.
- Private investments with irregular deposits.
- Portfolios with partial withdrawals.
What is a good XIRR?
In India, 6–7% may be close to fixed deposit returns. 7–9% may be similar to debt funds. 10–15% is often considered good for long-term equity mutual funds. Stocks may show 12–20% or more, but risk and volatility are higher.
Common XIRR mistakes
- Entering investments as positive instead of negative.
- Forgetting final portfolio value as a positive cash flow.
- Using CAGR for SIPs.
- Ignoring actual dates.
- Comparing high-risk equity XIRR with low-risk FD returns directly.
Financial trust note
This calculator is for education and planning. It uses mathematical XIRR logic, but investment decisions should also consider risk, tax, asset allocation, time horizon and financial goals.
