What is Portfolio XIRR?

Portfolio XIRR (Extended Internal Rate of Return) shows the actual annualised return you are earning on your entire investment portfolio, taking into account when you invested and how much you invested at different points in time.

Unlike simple return calculations, XIRR recognises that investments are usually made in parts, not all at once. It adjusts for timing, making it a more accurate way to understand long-term performance.

Why XIRR matters

Most investors:

• Invest money gradually (monthly, quarterly, or at irregular intervals)
  
  

• Add more funds over time
  
  

• Exit partially or fully at different points
  
  

Portfolio XIRR answers a simple question:

“At what yearly rate has my invested money grown, considering all inflows, outflows, and time gaps?”

Simple example of Portfolio XIRR

Let’s say you invested in stocks over time:

• Jan 2022: Invested ₹1,00,000
  
  

• Jul 2022: Invested ₹50,000
  
  

• Jan 2023: Invested ₹50,000
  
  

Total invested: ₹2,00,000

As of Jan 2025, the total value of your portfolio is ₹2,70,000.

At first glance, it looks like:

• Profit = ₹70,000
  
  

• Simple return = 35%
  
  

But this does not account for when the money was invested.

Using Portfolio XIRR:

• The first ₹1,00,000 stayed invested for 3 years
  
  

• The later investments stayed invested for less time
  
  

When you calculate XIRR, the annualised return comes to approximately 11.8% per year.

This means:

Even though you invested at different times, your portfolio has effectively grown at ~11.8% per year.

How Portfolio XIRR is calculated (conceptually)

Portfolio XIRR uses:

• All cash outflows (investments made)
  
  

• All cash inflows (withdrawals or current portfolio value)
  
  

• The exact dates of each transaction
  
  

It then computes a single annual return rate that balances all of them.

You don’t need to calculate this manually—Allvest calculates it automatically using your transaction history.

How to read your Portfolio XIRR

• Positive XIRR → Your portfolio is growing
  
  

• Higher XIRR → Better long-term performance
  
  

• Lower or negative XIRR → Returns are underperforming or losses exist
  
  

Portfolio XIRR is best used to:

• Track performance over long periods
  
  

• Compare your returns against benchmarks (like NIFTY or mutual fund indices)
  
  

• Evaluate whether your investment strategy is working
  
  

Important thing to remember

Portfolio XIRR is:

• Time-weighted
  
  

• Cash-flow aware
  
  

• More accurate than simple returns
  
  

It gives you a realistic picture of how your money is actually working over time