What is CAGR?

Compound Annual Growth Rate (CAGR) is the annualized return an investment generates over time, smoothing out volatility. It helps investors compare mutual funds and assess long-term performance.

How to Use Our Mutual Fund CAGR Calculator

1. Enter your initial investment amount
2. Input the current/final value of your investment
3. Specify the investment period in years
4. Click “Calculate CAGR” to see your annualized return

Why CAGR Matters for Mutual Funds

• Eliminates volatility and shows a smoothed annual return
• Helps compare different mutual funds fairly
• Useful for long-term projections (5+ years)
• Better than absolute returns for understanding compounding

CAGR vs. SIP Returns

While CAGR works best for lump-sum investments, SIP (Systematic Investment Plan) returns require a different approach. If you invest periodically, use our SIP CAGR Calculator for more accurate results.

Real-World Example

If you invested ₹50,000 in a mutual fund that grew to ₹85,000 over 5 years:

• Absolute return = 70%
• CAGR = ~11.2% annually

This shows how compounding works over time.

Need a General CAGR Calculator?

If you’re calculating CAGR for stocks, bonds, or other investments, try our Standard CAGR Calculator.

Limitations of CAGR

While useful, CAGR doesn’t account for:

• Market volatility (only shows the end result)
• Additional SIP investments or withdrawals
• Expense ratios, taxes, or inflation

Tips for Mutual Fund Investors

✅ Compare CAGR across similar funds
✅ Look at long-term performance (5+ years)
✅ Combine with other metrics (Sharpe ratio, standard deviation)
✅ Remember: Past performance ≠ future results

Frequently Asked Questions

What’s a good CAGR for mutual funds?

For equity funds, 12-15% CAGR over 5+ years is considered strong. Debt funds typically yield 6-9% CAGR.

CAGR vs. Absolute Returns – Which is better?

• Absolute returns show total growth.
• CAGR shows annualized growth (accounts for compounding).

Can I use CAGR for SIP investments?

CAGR works best for lump-sum investments. For SIPs, use XIRR (Extended Internal Rate of Return).

Does CAGR include dividends?

Yes, if the final NAV includes reinvested dividends.

Conclusion

Our Mutual Fund CAGR Calculator helps you measure annualized returns easily. For better investment decisions, combine CAGR with other metrics and consult a financial advisor.