Investment returns
Absolute Return vs CAGR vs XIRR
Return measures answer different questions; selecting the wrong one can make a comparison misleading.
Reviewed 1 September 2026Absolute return
Absolute return measures total change relative to the starting value without annualizing it. It is simple and useful for a single period, but it cannot fairly compare investments held for different lengths of time.
CAGR
CAGR annualizes one beginning and one ending value over a stated duration. It smooths the path and assumes there are no intermediate investor cash flows.
XIRR
XIRR incorporates the dates and sizes of irregular contributions and withdrawals. It is normally more appropriate for a personal portfolio with several cash flows.
Selection checklist
Use absolute return for simple total change, CAGR for a beginning-to-ending comparison without intermediate flows, and XIRR for irregular dated cash flows. Always disclose fees, taxes and whether dividends are included.
Primary and authoritative sources
Sources support factual context. Share Market Open remains responsible for its explanations and calculator assumptions.