Corporate FinanceFinancial Glossary
XIRR (Extended Internal Rate of Return)
Definition
An extension of IRR that handles irregular cash flows by assigning specific dates to each cash flow. Unlike CAGR (which assumes a single lump sum) or SIP XIRR (which assumes equal intervals), XIRR works with any combination of investments and withdrawals at any dates.
Why It Matters
XIRR is the only accurate way to measure your actual mutual fund returns when you have made multiple purchases, SIPs, switches, and redemptions over time. The return shown in your fund statement or app should ideally be XIRR-based. If it shows simple or absolute returns, the actual performance may be very different.