XIRR on a mutual fund is the yearly rate that makes all your dated cash flows net out to zero. Each SIP payment counts as money going out on its date, and the fund's current value counts as money coming back on today's date. In the illustrative example below, three SIPs of ₹10,000 that are worth ₹32,400 at the end of the year show an absolute gain of 8%, but an XIRR of about 8.88%, because much of the money was invested for less than a year.
Why does a SIP need a special measure?
A lump sum is easy. You put in ₹1,00,000, it grows to ₹1,10,000 in a year, and the gain is 10%. Everyone agrees on the number.
A SIP is different. Money goes in on many dates. The ₹10,000 that went in twelve months ago has had a year to grow. The ₹10,000 that went in last month has had a few weeks. If you treat all of it as though it went in on day one, you understate the rate. If you ignore time altogether, you get a number that does not compare with anything else.
XIRR solves this by giving each rupee credit only for the time it was actually invested.
What does XIRR mean, in plain terms?
Imagine a bank deposit that pays one fixed yearly rate, compounded. Now replay your exact SIP history into that deposit: same amounts, same dates. XIRR is the rate at which that imaginary deposit would end up holding exactly what your fund holds today.
That is why XIRR answers the question "what yearly rate did my money actually grow at" for a stream of payments. It is a description of the past, not a prediction.
The formula
XIRR is the rate r that solves this equation:
Sum of cash flow ÷ (1 + r) ^ (days since first cash flow ÷ 365) = 0
Money going in (SIP payments, lump sums) is negative. Money coming back (redemptions, and the current value on the date you check) is positive. There is no closed-form way to solve for r. Spreadsheet XIRR functions and apps find it by trying values and narrowing in, usually with a method such as Newton's method or bisection.
A worked example with four dated cash flows
All figures here are illustrative, chosen to keep the arithmetic easy to follow. Asha Rao runs a monthly SIP of ₹10,000. She makes three SIP payments, then pauses, and checks the value at the end of the year.
| Date | Cash flow | Days from first cash flow |
|---|---|---|
| 5 Jan 2025 | −₹10,000 | 0 |
| 5 Feb 2025 | −₹10,000 | 31 |
| 5 Mar 2025 | −₹10,000 | 59 |
| 31 Dec 2025 | +₹32,400 (current value) | 360 |
She invested ₹30,000 in total, and it is worth ₹32,400. Three numbers describe that result:
- Absolute gain: (₹32,400 − ₹30,000) ÷ ₹30,000 = 8.00%.
- Lump-sum CAGR, as if all ₹30,000 went in on 5 Jan: (32,400 ÷ 30,000) ^ (365 ÷ 360) − 1 = about 8.12%.
- XIRR, using the real dates: about 8.88%.
We computed the XIRR with a small bisection solver: it searches for the rate at which the four discounted cash flows add up to zero, and it settles at 8.883%. At that rate, the present value of the ₹32,400 on 31 Dec exactly matches the present value of the three SIP payments.
Why is the XIRR higher than the other two?
The ₹10,000 from 5 March was invested for only 301 days, and the ₹10,000 from 5 February for 329 days. The money did not sit in the fund for a full year, so producing the same gain in that shorter time implies a higher yearly rate. Absolute gain ignores time entirely. The lump-sum CAGR pretends all the money went in on the first date. Only XIRR uses the true timing.
When does XIRR mislead?
XIRR is the right measure for irregular cash flows, but it has two traps worth knowing.
Short periods swing wildly
XIRR annualises. A 3% gain over two months turns into a yearly rate near 19%. A 3% loss over two months turns into a sharp negative. For a SIP that started a few months ago, XIRR is mostly noise. Many people wait for at least a year of history before reading it closely.
It depends on the date you check
The last cash flow is the fund's value on the day you check. The same SIP history can show a very different XIRR a week later if the market moves. XIRR describes the past up to a date. It does not say what will happen next, and it is not a promise of any future rate.
How do you compute XIRR for your own SIPs?
You need two things: every cash flow with its exact date, and the current value on the date you choose.
- Get every SIP payment and redemption with dates. A detailed CAS statement from CAMS or KFintech lists them for each folio. See track every SIP in one place for how to request one.
- Enter each payment as a negative number and the current value as a positive number, each with its date.
- Use a spreadsheet's XIRR function, or any tool that solves the equation above.
If a SIP was paused or stopped, keep the dates exactly as they happened. Gaps are fine. XIRR handles any pattern of dates, which is the whole point of it.
XIRR for the whole family
You can compute XIRR for one folio, for one person, or for every folio in the household together. The family-level number answers a different question: how did all our mutual fund money grow, taken as one pool. It sits naturally beside the family net worth snapshot described in family net worth across two people.
How Kosh helps
Kosh imports a CAMS or KFintech CAS statement, reads the dated payments for each folio, and computes XIRR from them, so you do not retype every SIP payment into a spreadsheet. Kosh does not keep the statement file and never asks for a bank login. The Family tab shows every Member's funds together, and Goals show projected progress for the funds and SIPs you link to them. Kosh tracks and warns; you decide.
See how it works at ourkosh.com.