What is XIRR (Extended Internal Rate of Return)?
XIRR calculates the annualized return of an investment with irregular cash flows — the most accurate way to measure portfolio returns with SIPs and partial withdrawals.
Formula
XIRR solves: Σ [Cash Flow_i ÷ (1 + XIRR)^((Date_i - Date_0)/365)] = 0
How to Interpret
XIRR is essential for Indian investors doing SIPs because money enters at different times. Absolute return doesn't account for timing; XIRR does.
Typical Ranges
12-15% XIRR for equity long-term in India is solid. Above 20% is exceptional.