A worked example, honestly small
Say you started a ₹10,000 monthly SIP in January 2025 in a fund whose one-year return reads 14%. Your January instalment rode the full year; your December instalment was invested for a few weeks. If markets rose mostly in the first half, your later instalments bought at high prices and dragged your personal return below 14%. If markets dipped mid-year and then recovered, those cheap mid-year units could push your XIRR above 14%. Same fund, same period, different answer — because the question is different: not “what did the fund do” but “what did your rupees do”.
Why point-to-point returns mislead SIP investors
Point-to-point (and CAGR) measures one deposit, held untouched. It is the correct yardstick for a lump-sum. Applied to a SIP it silently pretends all your money arrived on day one, which flatters or punishes you depending on the path markets took. Investors quit good SIPs every year because a statement showed “low returns” that were really just young instalments that had not had time to work.
The three numbers on your statement, decoded
- Absolute return — profit as a plain percentage of what you put in. Ignores time entirely; a 20% absolute gain over 7 years is unimpressive.
- CAGR / point-to-point — right for lump-sums, wrong for SIPs.
- XIRR — annualised, date-weighted, correct for any pattern of investments and withdrawals. Comparable across funds, across your whole portfolio, and against benchmarks like FD rates.
What a healthy XIRR looks like
Judge XIRR against horizon, not headlines: over short periods it swings wildly (an early market dip can show a scary negative XIRR on a two-month-old SIP — meaningless). Over 5+ years, compare it with the fund’s own SIP-return figure for the same period and with inflation. And remember its one limitation: XIRR says nothing about risk taken to earn it.
How to check yours in one tap
Any spreadsheet can compute XIRR if you export every transaction. Or let software do it: the PCJ Wealth app computes live XIRR for every SIP, every folio and the portfolio as a whole — automatically consolidated across AMCs. If your current platform only shows absolute returns, that alone is a reason to consolidate. PCJ Holdings is an AMFI-registered mutual fund distributor (ARN-63632), serving investors across India from New Delhi since the 1990s.
Frequently Asked Questions
XIRR (Extended Internal Rate of Return) is the annualised return of a series of investments made on different dates — exactly what a SIP is. It weights every instalment by how long it was actually invested.
The advertised figure assumes one lump-sum at the start of the period. Your SIP instalments entered at many different prices and times, so your personal XIRR can be higher or lower than the fund's point-to-point return.
CAGR measures one cash flow over one period. XIRR generalises it to many cash flows on many dates. For a single lump-sum held untouched, XIRR equals CAGR.
Any tool that has your full transaction history can compute it. The PCJ Wealth app shows XIRR for every SIP, folio and your whole portfolio automatically.
See your true return today
Download PCJ Wealth — one link, right store automatically — or ask us to walk you through your own XIRR.
Get the appGeneral information, not investment advice. Mutual fund investments are subject to market risks; read all scheme related documents carefully. PCJ Holdings Pvt. Ltd. · AMFI ARN-63632.