CAGR Calculator

Compound Annual Growth Rate (CAGR) is the rate at which an investment would have grown from its beginning value to its ending value, assuming profits were reinvested at the end of each period. Unlike simple average returns, CAGR smooths out volatility and gives you a single, meaningful annualised growth rate — making it the standard metric for comparing mutual fund and investment performance.

The CAGR formula is:

CAGR = (Final Value / Initial Value)^(1 / Years) − 1

For example, if you invested ₹1,00,000 and it grew to ₹2,00,000 in 5 years: CAGR = (2,00,000 / 1,00,000)^(1/5) − 1 = 14.87% p.a. This means your investment effectively grew at 14.87% every year.

Absolute return is the total percentage gain or loss over the entire holding period, regardless of time. CAGR normalises this gain to an annual rate, making it comparable across investments of different durations. For example, a 100% absolute return over 5 years equals a CAGR of ~14.87%, while the same return over 10 years equals only ~7.18% CAGR.

Mutual fund fact sheets typically report trailing returns as 1-year, 3-year, and 5-year CAGRs. Using CAGR helps you compare funds on an apples-to-apples basis, evaluate a fund manager's consistent performance, and set realistic expectations for your own portfolio. When taking a Loan Against Mutual Funds, knowing your fund's CAGR helps you assess whether investment growth will comfortably offset borrowing costs.