Lesson 16 of 50 for advisers · XIRR vs CAGR for a client · 4 min read · Reviewed 13 Nov 2026
CAGR assumes all the money went in on day one, which fits a lump sum. A SIP’s money goes in month by month, so its yearly return is measured by XIRR, which weighs each rupee by how long it was invested. Applying CAGR to a SIP’s total understates the return; fund factsheets and adverts show CAGR because they measure one unit from start to end.
CAGR is the steady yearly growth that turns a starting amount into an ending one. It fits a single lump sum.
A SIP puts money in every month, so the later rupees have had less time to grow. XIRR weighs each payment by how long it has been invested.
Applying CAGR to a SIP’s total treats every rupee as if it went in on day one, so the return looks lower than it is. The calculator shows all three numbers for the same SIP.
SEBI asks fund houses to show scheme returns as CAGR over 1, 3, 5 and 10 years and since launch. That measures one unit from start to end, not a client’s SIP.
Key idea: Quote XIRR for a client’s own SIPs, and CAGR for a scheme’s published performance.
Try the calculator and the one-question quiz on this page to check your own numbers.
No SEBI rule requires it. The statement shows cost and value; XIRR has to be worked out from the transactions.
CAGR for at least 1, 3 and 5 years and since launch, the value of ₹10,000 invested, and whether it is the regular or direct plan.
Absolute return is the total gain on what went in, with no adjustment for time. Over several years it is always larger than a yearly figure.
For learning only, not investment advice. Built in India by a team that tracks its own money on Reva.