Stock Market · Mutual funds, deeper

XIRR

XIRR is Excel's function for calculating the actual annualised return on a series of cashflows at different dates. For mutual fund SIP investors, it's THE metric that tells you what you really earned.

How XIRR works

You list every transaction (SIP date and amount as negative, final value as positive on redemption date). XIRR computes the constant annual rate that would have produced those exact cashflows.

Example using Excel

Date / Amount:

01-Jan-2020 / -10,000 (SIP)

01-Feb-2020 / -10,000

... (24 monthly SIPs)

01-Dec-2021 / -10,000

31-Dec-2021 / +2,76,400 (current value)

Excel formula: =XIRR(values, dates)

Result: 14.2% (your actual annualised return)

> XIRR is the gold standard for measuring SIP returns. Without it, you're guessing how your portfolio is actually performing.

Where to find your XIRR automatically

• Most MF platforms show portfolio XIRR in the portfolio or analytics view, often by default
• Buying direct from AMCs usually means calculating it yourself across folios
• A spreadsheet XIRR function over your transaction history works anywhere, and is the only route that spans multiple platforms

What's a good XIRR for SIP?

Over long periods:

• Equity SIP: 12-15% XIRR is good
• Debt SIP: 6-8% XIRR is good
• Hybrid SIP: 9-12% XIRR is good

Below these numbers consistently? Time to evaluate whether you're in the right funds.

XIRR limitations

• Assumes you can reinvest cashflows at the XIRR rate (rarely true)
• Sensitive to recent values. Recent dips lower XIRR even on profitable long-term SIPs
• Doesn't account for tax or exit loads

Takeaway. XIRR is the metric that measures what an SIP actually returned, because it weights every instalment by how long it was invested. Most platforms calculate it for you. A persistent gap between your XIRR and the category norm is a prompt to check whether the fund, the costs, or your own timing explains it.