Glossary › CAGR (Compound Annual Growth Rate)
CAGR (Compound Annual Growth Rate)
The single annual rate that, compounded over the period, takes you from the starting value to the ending value.
Formula
CAGR = (End / Start)^(1 / years) − 1
Intuition
CAGR smooths a multi-year return into one annual figure. ₹100 growing to ₹150 over 3 years is a 14.47% CAGR — meaning if it had grown at exactly 14.47% every year, you'd land in the same spot. It is the standard way to compare returns across funds with different histories.
What to look for
There is no universally 'good' CAGR — it depends on the fund's category, the period being measured, and the prevailing rate environment. Always compare to the assigned benchmark and to peers in the same category.
Caveats
CAGR assumes a single lump-sum entry and a single exit at the end. It says nothing about the journey: two funds with the same CAGR can have wildly different drawdowns and volatility along the way.