What does XIRR mean?

Extended Internal Return Rate, often known as XIRR, is a metric of return used when different investments are made in a financial asset (at distinct times).

A Systematic Investment Plan (SIP) is used for the majority of mutual fund investments. A SIP is a method for investing consistent amounts over time in a scheme. As a result, making various investments across a variety of time frames can leave your return estimate quite unclear because more diverse investments lead to more diverse buying costs.

Here, XIRR enters the picture. The present value of your investment in mutual funds is provided to you by XIRR. When applied to each investment, XIRR is a rate that is precisely computed and gives you a specific assessment. Even if it isn't always done in SIP, it is crucial in the calculation of yields for mutual funds. As this is your portfolio assessment, unlike any other calculating instruments, XIRR also works with lump sum investments.