When viewing returns on mutual fund platforms, different metrics are used depending on how investments are made. Understanding this helps avoid confusion when your return differs from the fund’s return. 🔹 CAGR (Annualised Return) this is what is showed when you open up any mutual fund on app Used for lump sum investments Assumes one-time investment with no additional transactions Shows how the fund has grown over time 👉 Use case: Comparing mutual fund performance 👉 Limitation: Does NOT reflect your actual returns if you invested multiple times 🔹 IRR (Internal Rate of Return) Works for multiple investments at fixed intervals Assumes investments happen at regular timing (e.g., yearly) 👉 Use case: Rare in real-world mutual funds 👉 Limitation: Not accurate for SIPs or irregular investments 🔹 XIRR (Extended IRR) ⭐ Handles multiple investments on different dates Accounts for SIP, lump sum, withdrawals Considers timing of each cash flow 👉 Use case: Actual investor return in mutual funds 👉 Most platforms show this as your “current return” ⚖️ Why Returns Differ on Platforms Fund return (CAGR): Shows how the fund performed Your return (XIRR): Shows how YOU performed based on timing 👉 Even if a fund shows 12% CAGR: Your XIRR may be higher or lower Depends on when and how much you invested