Ch.11 · Comparing Fund Performance · medium
Which of the following return metrics is most appropriate for evaluating SIP performance in a mutual fund?
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EXPLANATION
XIRR (Extended Internal Rate of Return) is the correct metric for SIP performance evaluation because it accounts for the timing and size of each irregular cash flow (monthly SIP instalments and the final redemption). CAGR works for lump sum investments with a single investment date.
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