How to Calculate Returns on Your Mutual Fund SIP

You have been running a SIP for several months or years and want to know how much you have actually earned. Calculating returns on a SIP is not as straightforward as calculating returns on a fixed deposit, because you invest different amounts at different times. This guide explains exactly how to calculate returns on your mutual fund SIP.

Why SIP Returns Are Different

When you make a lump sum investment, calculating the return is simple: compare the final value to the initial investment. But with a SIP, each monthly instalment enters the market at a different NAV and has been invested for a different duration. Your first instalment has been invested for much longer than your latest one.

This is why you cannot simply compare total invested amount to current value and call it your annual return. You need the right metric.

Three Ways to Measure SIP Returns

1. Absolute Return

This is the simplest calculation — the total percentage gain or loss on your investment.

Formula: ((Current Value – Total Amount Invested) / Total Amount Invested) × 100

Example: You invested ₹1,20,000 through SIP (₹10,000/month for 12 months). Current value is ₹1,32,000.

Absolute Return = ((1,32,000 – 1,20,000) / 1,20,000) × 100 = 10%

The limitation: this does not account for the time factor. A 10% return in 6 months is very different from 10% in 3 years.

2. CAGR (Compound Annual Growth Rate)

CAGR tells you the annualized return assuming your money grew at a steady rate. However, CAGR is designed for lump sum investments. When used for SIPs, it understates your actual return because it assumes all money was invested on day one, when in reality each SIP instalment was invested at different times.

Verdict: Do not use CAGR for SIP return calculation. It is misleading.

3. XIRR (Extended Internal Rate of Return) — The Right Method

XIRR is the most accurate way to measure SIP returns. It considers each individual cash flow (each SIP instalment) and its specific date to calculate your true annualized return.

XIRR treats each SIP instalment as a separate investment and calculates the single annual return rate that would result in your current portfolio value.

How to Calculate XIRR

Using Excel or Google Sheets

You can calculate XIRR easily in a spreadsheet:

1. In column A, list all your SIP dates
2. In column B, list the SIP amounts as negative numbers (money going out from you)
3. In the last row, add today’s date in column A and your current portfolio value as a positive number in column B
4. Use the formula: =XIRR(B1:B13, A1:A13)
5. Multiply the result by 100 to get the percentage

Example:

Suppose you invested ₹5,000 monthly from January 2024 to December 2024, and your current value in March 2025 is ₹68,500.

Your cash flows would be: -5000 on each SIP date, and +68,500 on the current date. The XIRR formula would give you your actual annualized return.

Using an Online SIP Calculator

Many websites offer free SIP return calculators. Simply enter your monthly SIP amount, start date, and current value to get your XIRR.

Using the Bachatt App

The easiest way is to check your returns directly on the Bachatt app. Your XIRR is automatically calculated and displayed for each fund and for your overall portfolio. No manual calculations needed.

Understanding Your XIRR Number

Once you have your XIRR, here is how to interpret it:

• Below 8%: Underperforming — your fund may not be suitable for long-term wealth creation
• 8-12%: Average — acceptable for debt or balanced funds
• 12-18%: Good — typical for well-performing equity funds
• Above 18%: Excellent — but verify if this is sustainable over longer periods

Remember that returns fluctuate. A SIP running for less than 3 years may show volatile XIRR. Give your equity SIP at least 5 years before judging performance.

SIP Return Estimation: What to Expect

While past returns do not guarantee future performance, here are general long-term expectations for different fund types:

• Large Cap / Index Funds: 10-13% XIRR over 10+ years
• Flexi Cap / Multi Cap: 12-15% XIRR over 10+ years
• Mid Cap / Small Cap: 13-18% XIRR over 10+ years (with higher volatility)
• Hybrid / Balanced: 9-12% XIRR over 10+ years

Tips for Better SIP Returns

• Stay invested long-term: The longer you stay, the better compounding works for you
• Increase SIP annually: A 10% step-up in SIP each year significantly boosts your final corpus
• Do not stop during market falls: Corrections help you accumulate more units at lower prices
• Review annually: Compare your fund’s XIRR with its benchmark and category average

Track Your SIP Returns on Bachatt

Stop guessing and start tracking. Bachatt automatically calculates your XIRR, absolute returns, and investment growth for every fund in your portfolio. Get a clear picture of how your money is performing with intuitive charts and dashboards.

Download the Bachatt app today and take control of your mutual fund investments.