XIRR
The yearly return measure built for investments made on many different dates, like an SIP.
XIRR is the right way to measure the return on an SIP, because you invested on many dates and each instalment was in the market for a different length of time. A simple average cannot handle that. XIRR accounts for the timing of every instalment and gives one annualised rate. Spreadsheets have an XIRR function, and fund statements usually show it for you.
Questions people ask
What is the full form of XIRR?
XIRR stands for extended internal rate of return. It measures the annualised return when you invested on many different dates, like a monthly SIP.
Why use XIRR for an SIP?
Each instalment was invested for a different length of time, which a simple average cannot handle. XIRR accounts for every date and gives one annualised rate.
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