What Is XIRR and Why It's a Better Way to Track SIP Returns Than Returns %

XIRR shows the yearly return on your SIP (a fixed amount invested every month). It counts the date of every instalment. Returns % ignores timing, so it can look much lower than your real yearly return. For a SIP, XIRR is the fairer number.

Key Facts

XIRR stands for Extended Internal Rate of Return. It gives one yearly return figure for money invested on different dates.
Returns % (also called absolute return) compares your total gain with your total money invested. It does not count when each instalment went in.
Our worked example invests ₹5,000 a month for 12 months. Returns % is 10%, but XIRR is about 18.9% a year.
For a single lump sum, CAGR (Compound Annual Growth Rate) and XIRR give almost the same answer.

Last updated: October 2026

You start a SIP and check your app after one year. One screen says 10%. Another screen says nearly 19%.

Both numbers can be correct. They measure different things.

Returns % looks only at total gain and total money invested. It does not ask when each instalment went in. XIRR does ask. This post explains XIRR in plain words. It shows a worked rupee example. It also tells you how to check your own SIP’s XIRR in two minutes.

XIRR vs Returns % vs CAGR: Which Number Tells You What?

Measure	What it tells you	Counts the date of each instalment?	Best used for
Returns % (absolute return)	Total gain as a percentage of total money invested	No	A quick check of total gain
CAGR	Yearly growth between one start value and one end value	No (one investment only)	A lump sum invested once
XIRR	Yearly return on money that goes in or out on different dates	Yes	SIPs, step-up SIPs, and withdrawals

Deepak Gokul holds the CWM® certification, is NISM-Series-XVII: Retirement Adviser Certified, and is an IRDAI Licensed Insurance Advisor. He has over 19 years of experience helping families in Chennai and across India plan their goals with SIPs. His firm, Deepak Wealth Framework Pvt Ltd, is AMFI Registered as a Mutual Fund Distributor. We deal in Regular Plans.

What Is XIRR in Simple Words?

XIRR gives one yearly return number for money that goes in on different dates. A SIP is exactly this kind of investment.

Each instalment stays invested for a different length of time. The January instalment works for a full year. The December instalment works for only one month.

XIRR counts this difference. It treats each rupee according to how long it stayed invested. So it shows what your money earned each year, not just in total.

Why Does Returns % Mislead SIP Investors?

Returns % is the simple formula most apps show first. You take your current value, subtract the money you invested, and divide by the money you invested. Then you multiply by 100.

This gives a quick snapshot. But it has one big gap. It treats every instalment as if you invested it on day one.

For a lump sum (one big payment made once), that is fine. For a SIP, it is not. Most of your money stays invested for less than the full period. So your total gain looks small next to your total money.

This does not mean your fund did badly. It means the number ignores time. So never compare a SIP’s Returns % with a fixed deposit’s yearly rate. They are not the same kind of number.

How Does XIRR Change the Picture? A Worked Example

Take a made-up SIP. You invest ₹5,000 on the 5th of every month. You start on 5 January 2025 and make 12 instalments, until 5 December 2025. On 5 January 2026, your units are worth ₹66,000.

Item	Amount
Total money invested (12 × ₹5,000)	₹60,000
Value on 5 January 2026	₹66,000
Total gain	₹6,000
Returns % (₹6,000 ÷ ₹60,000)	10%
XIRR	About 18.9% a year

Why is there such a gap? On average, each rupee stayed invested for a little over six months. So the 10% gain came in about half a year. Spread over a full year, that rate is close to 19%.

This example is made up to show the method. It is not a real scheme, and it is not a promise of returns.

How Can You Check Your Own SIP’s XIRR?

You have three easy options.

Your statement or app. Many fund statements and portfolio apps show XIRR next to your current value. Please check the label, because some screens show only Returns %.
A spreadsheet. Put every date in one column. Put every amount in the next column. Write money you invested as negative numbers. Add your current value as a positive number with today’s date. Then type =XIRR(amounts, dates). Excel and Google Sheets both have this function.
Your distributor. Ask for a SIP statement that shows XIRR. If you are not sure how to read it, we can help.

For official investor education, you can also visit AMFI and SEBI.

When Should You Be Careful With XIRR?

XIRR is useful. But it is not perfect. Keep these points in mind.

Short periods can mislead. With only a few months of data, XIRR can turn a small gain into a big yearly number. Wait at least a year before you read much into it.
It describes the past. A high XIRR does not promise the same return in future. Market-linked returns change.
Compare fairly. When you compare two funds, use the same start date, the same instalment dates, and the same end date.
It does not show risk. Two funds can have the same XIRR and very different ups and downs.

Frequently Asked Questions

What is XIRR in mutual funds?

XIRR is the Extended Internal Rate of Return. It gives one yearly return figure for investments made on different dates, such as a SIP. It counts the exact date and amount of every instalment and your current value. So it shows what your money earned each year, taking the timing of every payment into account.

Is XIRR better than Returns % for a SIP?

For a SIP, yes. Returns % treats every instalment as if you invested it on day one. XIRR counts how long each instalment stayed invested. So XIRR gives a fairer yearly figure. Returns % still helps as a quick check of your total gain. Use both, but use XIRR when you compare a SIP with other options.

What is the difference between XIRR and CAGR?

CAGR (Compound Annual Growth Rate) works for one investment with one start date and one end date. A lump sum is an example. XIRR works when money goes in or out on several dates, like a SIP. If you invest only once, CAGR and XIRR give almost the same answer.

How do I calculate XIRR in Excel or Google Sheets?

List every instalment date in one column and every amount in the next. Write money you invested as negative numbers. Add your current value as a positive number, with today’s date. Then type =XIRR(amounts, dates). Both Excel and Google Sheets have this function. The result is your yearly return as a percentage.

Why does my SIP show a low Returns % but a high XIRR?

Most of your instalments stayed invested for less than the full period. Returns % compares total gain with total money invested, so it looks small. XIRR turns that gain into a yearly rate by counting how long each instalment worked. In our example of ₹5,000 a month for 12 months, 10% Returns % became about 18.9% XIRR.

Does a high XIRR mean my fund will give the same return in future?

No. XIRR only describes the past. Mutual fund returns change with the market, and no scheme can promise a fixed return. A high XIRR over a short period can also look better than it really is. Check the fund’s risk, your goal, and your time frame before you decide. Mutual Fund investments are subject to market risks.

What Is XIRR and Why It’s a Better Way to Track SIP Returns Than Returns %