What is XIRR?
CAGR works for a single lumpsum: one amount in, one date, one amount out, another date. A SIP breaks that assumption - money goes in every month, each installment held for a different length of time by the time you measure the return. XIRR solves this generally: it’s the single annualized rate that, applied to every cash flow on its actual date, makes their combined present value (including the final redemption) equal zero.
0 = Σ CFi / (1 + XIRR)^((di − d0) / 365)
There’s no closed-form solution - XIRR is solved numerically (the same way Excel’s XIRR function does it), by trying rates until the equation balances to zero. CAGR is really just a special case of XIRR with exactly two cash flows.
Real example: Parag Parikh Flexi Cap Fund
Rolling SIP XIRR for Parag Parikh Flexi Cap Fund - Direct Plan - Growth, as of 2026-09-27 - each window is the XIRR of a monthly SIP run for that many years, repeated across every real starting month.
CHART
Rolling SIP XIRR by holding period - min, median, max
Same fund, same real cash-flow dates per window - just XIRR instead of CAGR, because a SIP's money goes in on many dates, not one.
| SIP duration | Min XIRR | Median XIRR | Max XIRR |
|---|---|---|---|
| 3Y | -11.6% | 20.4% | 44.7% |
| 5Y | 10.9% | 22.1% | 30.7% |
| 7Y | 15.5% | 21.9% | 25.7% |
| 10Y | 16.7% | 17.6% | 18.5% |
Fund: Parag Parikh Flexi Cap Fund - Direct Plan - Growth
How to use it in practice
XIRR is the annualised return for money invested on several different dates, so it is the right measure for a SIP or for any portfolio with additions and withdrawals. It weights each cash flow by how long it was invested. Use it to judge your own SIP results and to compare them with a lumpsum CAGR.
Common mistakes
XIRR on a short period can look extreme, because annualising a few months of gains or losses magnifies them. It also depends on the dates of your cash flows, so two people investing in the same fund can have different XIRRs. Do not compare an XIRR with a point-to-point CAGR without remembering they treat timing differently.
Frequently asked questions
What is the difference between XIRR and CAGR?
CAGR works for a single investment and a single exit. XIRR handles many cash flows on different dates, so it is used for SIPs and portfolios with additions and withdrawals.
Why is my XIRR different from the fund’s return?
Because your XIRR depends on when you invested, while the fund’s return is measured from fixed dates. Two investors in the same fund can have very different XIRRs.
Can XIRR be negative?
Yes. If your holdings are worth less than you put in, the annualised rate is negative.
WHAT THIS MEANS FOR YOU A fund’s lumpsum CAGR and SIP XIRR over the same period are rarely identical - don’t mix them up when comparing two funds. Always compare XIRR to XIRR (SIP to SIP) and CAGR to CAGR (lumpsum to lumpsum), never one against the other.
METHODOLOGY XIRR computed over every overlapping monthly-SIP window of each stated length in the fund’s real NAV history, as of 2026-09-27. Data: Punji NAV history. Not investment advice.