Definition

XIRR

XIRR is an annualized return metric for investments with irregular cash-flow timing.

Evaluate performance when contributions and withdrawals do not occur at fixed intervals.

Last reviewed: 2026-03-03 | Review cycle: 120 days | Next review due: 2026-07-01

How It Works

Unlike simple CAGR, XIRR accounts for exact timing and size of each cash flow.

It is especially useful for portfolios with variable contributions, partial exits, or staggered deposits.

Interpret XIRR with context because timing effects can amplify or reduce apparent performance.

Scenario

Investor adds funds quarterly in variable amounts and makes one mid-year withdrawal.

Outcome

XIRR gives a more faithful annualized return estimate than fixed-period CAGR assumptions.

Scenario

Two portfolios end with same value but different cash-flow timing.

Outcome

XIRR can differ meaningfully due to timing-weighted effects.

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Is XIRR always better than CAGR?

It is better when cash flows are irregular; for single in/out flows, CAGR is often sufficient.

Can XIRR be unstable?

It can be sensitive when cash-flow signs and timing patterns are complex.