XIRR (Extended Internal Rate of Return)

XIRR stands for Extended Internal Rate of Return. It is the rate of return calculated when there are multiple cash inflows and outflows taking place at irregular or regular intervals, such as monthly SIP investments.

Why CAGR fails for SIPs

While CAGR (Compound Annual Growth Rate) measures returns for a single lump-sum investment over a fixed period, XIRR accounts for the exact transaction date of every individual installment.