XIRR vs CAGR: Understanding Investment Return Metrics
5paisa Research Team
Last Updated: 02 Jan, 2025 01:02 PM IST
![XIRR VS CAGR Banner XIRR VS CAGR Banner](https://storage.googleapis.com/5paisa-prod-storage/files/market-guide/XIRR%20VS%20CAGR_0.jpeg)
Content
- What Is XIRR?
- What Is CAGR?
- XIRR vs CAGR: Key Difference
- XIRR Vs CAGR – Which Is Better?
- Limitations Or Assumptions Associated With XIRR And CAGR
- Conclusion
When it comes to measuring investment performance, two key metrics often come into play: XIRR (Extended Internal Rate of Return) and CAGR (Compound Annual Growth Rate). These tools help investors evaluate their returns and make informed portfolio decisions. But what exactly are these metrics, and how do they differ? Let's dive into the world of XIRR and CAGR to understand their roles in financial analysis and when to use each one.
More About Mutual Funds
- What is SIF (Specialised Investment Fund)?
- What Are Liquidity ETFs?
- Why Invest in ETFs Through SIPs?
- Difference Between ETFs and Stocks
- What is Gold ETF?
- Can We Pledge on Mutual Funds?
- Risks in Mutual Funds Investments
- Know How to Transfer Mutual Funds
- NPS vs ELSS
- XIRR vs CAGR: Understanding Investment Return Metrics
- SWP and Dividend Plan
- What is Solution Oriented Mutual Funds?
- Growth Vs Dividend Reinvestment Option
- Annual vs Trailing vs Rolling Returns
- How to Get Capital Gain Statement for Mutual Funds
- Mutual Funds Vs Real Estate
- Mutual Funds vs. Hedge Funds
- Target Maturity Funds
- How to Check Mutual Fund Status with Folio Number
- Oldest Mutual Funds In India
- History Of Mutual Funds In India
- How To Redeem ELSS Before 3 Years?
- Types of Index Funds
- Who Regulates Mutual Funds In India?
- Mutual Fund Vs. Share Market
- Absolute Return in Mutual Fund
- ELSS Lock in Period
- Treasury Bills Repurchase (TREPS)
- Target Date Fund
- Stock SIP vs Mutual Fund SIP
- ULIP vs ELSS
- Long Term Capital Gain Tax on Mutual Funds
- Smart Beta Funds
- Inverted Yield Curve
- Risk-Return Trade-Off
- Registrar and Transfer Agents (RTA)
- Mutual Funds Overlap
- Mutual Fund Redemption
- Mark to Market (MTM)
- Information Ratio
- Difference Between ETF and Index Fund
- Difference Between Mutual Fund and Index Fund
- Top 10 High Return Mutual Funds
- Passive Mutual Funds
- Passive Funds vs Active Funds
- Consolidated Account Statement
- Mutual Funds Minimum Investment
- What is Open Ended Mutual Fund?
- What is Closed End Mutual Fund?
- Real-Estate Mutual Funds
- How to Stop SIP?
- How to Invest in SIP
- What is a Blue Chip Fund?
- What is XIRR in Mutual Funds?
- What is a Hedge Fund?
- Tax Treatment of Long Term Capital Gains
- What is SIP?
- NAV in Mutual Funds
- Advantages of Mutual Funds
- Stocks vs Mutual Funds
- What is STP in Mutual Fund
- How Mutual Fund Works?
- What is Mutual Fund NAV?
- What are Mutual Funds?
- Mutual Fund Cut Off Time
- Mutual Fund the Best Investment Option for Conservative Investors
- Advantages and Disadvantages of Mutual Funds
- How to Choose Mutual Funds in India?
- How to Invest In Mutual Funds?
- How to Calculate NAV of Mutual Fund?
- What Is CAGR In Mutual Funds?
- AUM in Mutual Fund
- Total Expense Ratio
- What is XIRR in Mutual Funds?
- What is SWP in Mutual Fund
- How to Calculate Mutual Fund Return?
- Gold Mutual Funds
- Tax On Mutual Fund Investment
- The Top Benefits and Drawbacks of The Rupee Cost Averaging Approach
- How to Start a SIP Investment?
- What Is SIP & How does SIP Work?
- Best SIP Plans for Long Term: How and Where to Invest
- Best SIP Mutual Fund Plans
- ELSS Vs SIP
- Top Fund Managers in India
- What is NFO?
- Difference Between ETF and Mutual Fund
- ULIPs VS Mutual Funds
- Direct Vs. Regular Mutual Funds: What’s The Difference?
- ELSS vs Equity Mutual Fund
- NPS vs Mutual Fund
- Can NRIs Invest in Mutual Funds?
- Mutual Funds Categorisation In India
- Everything You Need to Know About Small-Cap Funds
- What is Public Provident Fund ?
- What is Large Cap Mutual Fund ?
- What is Index Fund ?
- What is IDCW in Mutual Fund ?
- What is Hybrid Fund?
- What is Gilt Fund ?
- What is ELSS Fund ?
- What is Debt Funds?
- What is an Asset Management Company - A Thorough Explanation
- What are Mid Cap Funds
- Liquid Funds - What are Liquid Funds?
- A Beginner's Guide to Investing in Fund of Funds Read More
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
Changes in cash flow frequency significantly impact XIRR calculations, as each transaction's timing is considered. More frequent cash flows generally lead to more accurate XIRR results. CAGR, however, isn't affected by cash flow frequency as it only uses the initial and final values.
Yes, several tools are available for calculating XIRR and CAGR. Microsoft Excel and Google Sheets have built-in functions for both. Many financial websites and mobile apps also offer calculators for these metrics. Specialised financial software is available for more complex calculations.
XIRR and CAGR help investors and analysts compare different investment options and evaluate performance. XIRR provides a more accurate picture of investments with irregular cash flows. At the same time, CAGR offers a simple way to understand and compare long-term growth rates. Both metrics aid in making informed investment decisions and setting realistic expectations.
XIRR is often preferred in industries with irregular cash flows, such as real estate, private equity, and venture capital. It's also commonly used in mutual fund performance analysis, especially for SIPs. CAGR is more widely used in stock market analysis, economic growth measurements, and performance comparison across different market sectors or indices.