Mutual fund returns calculator

Which return is the right return

Three readings appear on this page because each answers a different question. Absolute return answers what per cent the money has grown by in total. CAGR answers what steady annual rate would take the money from the starting value to the ending value across a single period. XIRR answers what single annual rate would make a messy series of dated purchases, redemptions and a current value all discount back to zero. A one-time investment with one ending value needs only CAGR. A SIP or a lumpy pattern of top-ups and part-exits needs XIRR.

These are reporting figures, not promises. Each describes the past at a chosen cut-off and carries no claim about the next period.

The arithmetic, in plain English

Absolute return is the current value minus the amount invested, divided by the amount invested, expressed as a percentage. It ignores how long the money was held.

CAGR is the current value divided by the invested amount, raised to the power one divided by the years held, minus one, expressed as a percentage. It treats the holding as a single lump across a single period.

XIRR treats each purchase as a negative cash flow and each redemption or current value as a positive cash flow, each on its own date. It then searches for one annual rate r that makes the sum of each flow divided by one plus r raised to the power of the days from the first flow divided by 365, equal to zero. The page's engine does this with bisection on the range from minus 99.9 per cent to 1,000 per cent, matching the reference formula in a spreadsheet's XIRR function.

Worked example you can check

Take ₹2,00,000 invested once and worth ₹3,20,000 exactly three years later. Absolute return is (3,20,000 minus 2,00,000) divided by 2,00,000, which is 60 per cent. CAGR is 3,20,000 divided by 2,00,000, which is 1.6, raised to the power one-third, which is about 1.1696, minus one, which is about 16.96 per cent a year.

Now add a second payment. ₹1,00,000 goes in on 1 January 2024, another ₹50,000 on 1 July 2024, and the holding is worth ₹1,80,000 on 1 January 2026. Absolute return is (1,80,000 minus 1,50,000) divided by 1,50,000, which is 20 per cent across the whole holding. CAGR is undefined because the investment did not go in all at once. The XIRR is about 10.42 per cent a year.

To check the 10.42 per cent, discount each flow back at that rate. The net present value is -1,00,000 + -50,000 divided by (1.1042) raised to 182 divided by 365, plus 1,80,000 divided by (1.1042) raised to 731 divided by 365. The sum is close to zero, which is the condition XIRR solves for. A spreadsheet's XIRR on the same three rows returns the same rate.

When each number applies

Use absolute return as a quick check of the total gain or loss over the whole period. It does not need a start or end date and gives the same figure for a one-month fluke and a ten-year hold. It is a weak basis for comparing across schemes.

Use CAGR when the money was a single lump sum, held from a known date to a known date, with no top-ups or part-redemptions in between. Scheme factsheets quote one-year, three-year and five-year CAGR on this basis. Compare schemes on the same period only.

Use XIRR when there has been any mix of SIP, lumpsum, switch-in, switch-out, part-redemption or an SWP, and the current value is the final row. XIRR carries the timing of every rupee into the result. On a pure SIP, XIRR and the SIP calculator's steady-rate CAGR will agree closely at the end of each year.

Common cases the page handles

If the flows have no sign change, the bisection can find no rate, and the page prints a calm note. The usual cause is that only purchases are entered and no current value or redemption yet. Add a current value row at today's date with the current holding value to fix it.

If only one or two rows are entered, the page says the same. XIRR needs at least one outflow and one inflow on different dates. Dates in any order are fine; the page sorts them for the table and the chart. A redemption row counts as an inflow with a positive sign, a current value row counts as an inflow too, and a purchase counts as an outflow with a negative sign.

Direct and regular plans, and the TER framework

Every mutual fund scheme has two plan versions: direct and regular. The scheme's investments are identical; what differs is the Total Expense Ratio. A regular plan pays a trail commission to a distributor and so has a higher TER than the direct plan of the same scheme. The gap compounds in the daily Net Asset Value over the years, so direct plans show a higher CAGR and a higher XIRR for the same market move.

A scheme's total expense ratio is a base expense ratio plus certain regulatory levies, with caps set by scheme type and AUM slab. The regulations also lowered some reported caps on base expense ratios. Sources differ on some of the cap values, so they are not printed here. The direction, that direct plan returns exceed regular plan returns for the same scheme on the same period, is not disputed. The exact amount by which this calculator's CAGR or XIRR will shift if you move from regular to direct depends on your scheme and is given in the scheme's Statement of Additional Information.

What this calculator leaves out

• Tax on redemptions. For an equity-oriented fund, units held above 12 months are long-term, taxed at 12.5 per cent above a ₹1,25,000 yearly exemption on listed equity and equity funds; units held 12 months or less are short-term at 20 per cent. Debt fund units bought on or after 1 April 2023 are taxed at slab rate, whatever the holding period. Enter the pre-tax cash flows here.
• Exit load on units sold inside the scheme's no-load period. If you suffered an exit load, enter the net amount received as the redemption row.
• STT, which does not apply to a mutual fund transaction. STT applies to listed securities on an exchange.
• Dividend or IDCW payouts received in cash during the holding. Enter each payout as a redemption row.

Frequently asked questions

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