SIP Returns: Advertised vs Actual After All Charges
Fund houses show pre-expense, pre-tax CAGR. We show post-expense, post-tax XIRR — the number you actually earn.
₹10K SIP in Nifty 50 index fund — advertised vs actual
vs the 13.5% CAGR shown everywhere
CAGR vs XIRR: why SIP returns are lower
CAGR measures lump-sum return — put ₹10L in, see what it becomes. SIP investors put money in monthly. Early SIPs have been invested longer and earned more; recent SIPs have barely grown. XIRR accounts for this time-weighting. A fund showing 13.5% CAGR will show ~11–12% XIRR for a SIP investor. This isn't a flaw — it's just how SIP math works. But fund houses always show CAGR because it's higher.
Why fund comparison gets misleading
When two funds show 15% and 13% CAGR, the actual SIP return difference might be only 1% (instead of 2%). XIRR compresses the gap because recent poor performance affects the calculation more for SIP investors. Always compare SIP XIRR, not CAGR, when evaluating your actual returns.
The honest way to track your returns
Use the XIRR function in Excel/Google Sheets or apps like Groww, Kuvera that show your portfolio XIRR automatically. Input: dates and amounts of each SIP + current portfolio value. This gives your true return accounting for timing. If your portfolio shows 12% XIRR over 5 years, that's genuinely good — don't compare it to a fund's 15% CAGR and feel bad.
What to do
1. **Track returns using XIRR, not CAGR** — this is your honest number.\n\n2. **Don't panic if your SIP return seems lower than the fund's return** — SIP math works differently.\n\n3. **Continue SIPs in market downturns** — lower NAV means more units purchased, which boosts long-term XIRR.\n\n4. **Use index funds for core allocation** — 0.1–0.2% expense ratio vs 1.5% for active funds. Over 20 years, index beats 80% of active funds after expenses.