New Delhi, June 8 -- The Compound Annual Growth Rate (CAGR) is the average annual growth rate of a static investment amount over a specific period. However, the Extended Internal Rate of Return (XIRR) is used for investments involving multiple transactions and takes into account the timing and amount of each contribution or withdrawal.

Understanding the difference between these two return measures is important to accurately analyse mutual fund performance. Let's explore what CAGR and XIRR mean, their key differences, and when each metric should be used.

CAGR is a measure of the average annual growth rate of a mutual fund investment over a specific period. It shows the rate at which an investment would have grown each year if it had incr...