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Stop using CAGR to measure your investment returns. Experts say there is a better way.

Money ControlMoney Control · 3m
Stop using CAGR to measure your investment returns. Experts say there is a better way.

A recent analysis by Dezerv's Wealth Monitor app reveals that approximately 63% of Indian investors' portfolios are underperforming the market benchmarks, resulting in missed gains of over Rs 3,500 crores. The study attributes this underperformance to factors such as an overreliance on simple metrics like CAGR, poor asset allocation, and failure to rebalance portfolios based on market changes. Wealth Monitor differentiates itself by using Extended Internal Rate of Return (XIRR) instead of CAGR to assess performance against market benchmarks. The app aims to assist investors by identifying underperforming funds and calculating missed gains. Additionally, the app will soon extend its features to track the XIRR of stock portfolios as well.

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