Why do my mutual fund returns not match the advertised returns?

Because the two figures use different scoring systems. The advertised number is a CAGR computed on a hypothetical lump sum, driven only by the entry and exit NAVs. Your statement shows XIRR, which accounts for every SIP instalment and the different length of time each one stayed invested. Neither figure is wrong, and the fund house is not misreporting.

What is the difference between CAGR and XIRR?

CAGR is used for a lump-sum investment, where the entire amount gets the same time to compound, so only the entry and exit NAVs matter and fluctuations in between are ignored. XIRR is used for monthly SIPs, where each instalment has a different duration to compound, which makes it sensitive to the path the NAV takes between your entry and exit points.

Can a fund have a positive CAGR and a negative XIRR at the same time?

Yes. In the worked example in this article, a fund whose NAV rose from ₹10 to ₹12.50 reports a 25% CAGR, while the SIP investor's XIRR works out to -35.5%. The fund made money overall, but the investor's instalments were bought largely during the rise and were then held through the fall, so their weighted average cost of ₹15.17 per unit is above the ending NAV of ₹12.50.

What is the weighted average unit cost in a SIP?

It is the total cash spent divided by the total units bought. In the example, ₹12,000 invested across 12 monthly instalments buys 790.9711 units, giving a weighted average unit cost of ₹15.17 per unit. Comparing this figure with the current NAV tells you in plain rupee terms whether you are sitting on a gain or a loss.

Which return figure should I trust — CAGR or XIRR?

For judging your own investment, XIRR is the relevant number because it reflects your actual instalment dates and amounts. CAGR is useful for comparing the scheme itself against benchmarks and peers. CAGR tells you where the fund started and ended; XIRR tells you what happened to your money along the way.

Why Your Mutual Fund Returns Don’t Match Your Statement

Investors get excited when they see a mutual fund advertisement claiming a whopping 25% Trailing Return. But after buying the fund and checking the Consolidated Account Statement (CAS), one may find the actual returns to be close to -30%.

“Are the fund houses running a scam?”

No. The fund house isn't lying, and your app isn't broken. You are just looking at two completely different mathematical scoring systems: CAGR and XIRR.

Here is why they don't match, and which one actually tells the truth about your fund.

Advertised, Static CAGR vs. Personalized, Path-Sensitive XIRR

The advertised return rate, or the Compound Annual Growth Rate (CAGR), is used in the calculations for a lump-sum investment, where the entire fund gets the same time to compound and grow undisturbed. So, CAGR is affected only by the entry and exit point NAVs of the investment. It is not affected by any market fluctuations happening in between.

On the other hand, monthly SIP investment calculations use the Extended Internal Rate of Return (XIRR), where the computation accounts for each monthly installment having different time durations to compound. Thus, the XIRR is affected by the journey that a fund’s NAV takes during market volatility, between the entry and exit points of the investor’s investment.

The advertised CAGR rate, like 25% as used in the example, follows SEBI’s guidelines, cited in the Master Circular for Mutual Funds, 2026 (Chapter 14, 14.2.1(a)).

The XIRR reported on investment dashboards is still the annualized return rate and will be identical to the reported return rate on the advertisement, under perfectly calm market conditions for the duration of the investment.

XIRR and CAGR Are Different in a Volatile Market

Under a rising market, the CAGR is still the same at 25%. But the final annualized XIRR here changes.

Month	Date	SIP Amount	NAV on the Date	Units Allotted (Amount / NAV)
1	Jan 1	₹1,000	₹10.00	100
2	Feb 1	₹1,000	₹12.00	83.3333
3	Mar 1	₹1,000	₹14.50	68.9655
4	Apr 1	₹1,000	₹16.00	62.5
5	May 1	₹1,000	₹18.50	54.0540
6	Jun 1	₹1,000	₹20.50	48.7804
7	Jul 1	₹1,000	₹21.00 (Peak)	47.6190
8	Aug 1	₹1,000	₹19.00	52.6315
9	Sep 1	₹1,000	₹17.50	57.1428
10	Oct 1	₹1,000	₹15.50	64.5161
11	Nov 1	₹1,000	₹14.00	71.4285
12	Dec 1	₹1,000	₹12.50	80

For simplicity, we're treating the ~11-month Jan-to-Dec window as one year for this comparison. In practice, CAGR would be annualized precisely to the exact number of days held.

Total SIP Invested = ₹12,000
Total Units Accumulated = 790.9711 units
Starting NAV (Jan 1) = ₹10.00
Ending NAV (Dec 1) = ₹12.50

Ending Portfolio Value = Total Units Held × Latest Available NAV
Weighted Average Unit Cost = Total Cash Spent / Total Units Bought

For our example,

Ending Portfolio value = 790.9711 units × ₹12.50 = ₹9,887.14
Weighted Average Unit Cost = ₹12,000 / 790.9711 units = ₹15.17 per unit

Now, the XIRR (annualized rate) for the above investment can be calculated using the monthly cash outflow of ₹1,000, the ending portfolio value, and the dates of investments, as below,

0 = ΣMonthly Cash Flow(1 + annualized rate)^{Time Fraction in Years}

The annualized rate can be solved from the above formula using trial and error or a numerical iteration solution method only.

For our example, the XIRR = -35.5%

This XIRR of -35.5% reported on the investor’s dashboard is vastly different from the advertised 25% CAGR. It is even showing a massive loss.

The fund’s CAGR correctly computes the growth to be 25%, based on a hypothetical initial lump-sum investment of ₹12,000, made all on a single day (Jan 1). The fund NAV grew from ₹10 (Jan 1) to ₹12.50 (Dec 1), and this growth is reported as a CAGR.

For a SIP, there is no single start NAV to compare with. Comparing the Weighted Average Unit Cost (₹15.17) to the Ending NAV (₹12.50) tells one, in plain rupee terms, that the investor is sitting on a loss. But your statement's XIRR figure goes a step further; it also accounts for how long each installment was actually invested, which is why the annualized XIRR (-35.5%) shows such a steep loss.

Why SIPfund?

We are an AMFI-registered mutual fund distributor, and we support investors when they need help in goal planning, fund selection, and during market volatility.

Our SIPfund App provides easy fund selection and investment review to its investors through algorithm-powered planning and consolidated tracking. The money invested in the fund houses is also well protected through the use of NSE’s secure mutual fund platforms.

The Final Verdict

CAGR tells you where the fund started and ended. XIRR tells you what actually happened to your fund along the way. A positive CAGR with a negative XIRR can feel alarming. But it just means that the fund made money overall, even though your personal entry points hit a rough patch.

You can check the current Returns of your funds easily on the SIPfund App (iOS or Android).

If you still have any questions about the advertised fund CAGR and your actual Returns on the App, call our experts at 95133 55661, and they will walk you through it.

Disclaimer: The information provided in this article is for educational purposes only and does not constitute investment advice or a recommendation to buy or sell any mutual fund. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.