XIRR Win Rate: A Better Way to Compare Mutual Funds

When comparing two mutual funds, most investors look at a combination of return metrics—annual returns, CAGR, XIRR, rolling returns—and risk metrics such as standard deviation, maximum drawdown, and Sharpe ratio.

All of these have their place. But none of them directly answer the question I find most useful:

If I had actually invested my money in Fund A instead of Fund B, how often would I have ended up with a better outcome?

A "better outcome" simply means: if the exact same amount is invested on the exact same days, which fund gives me the higher corpus (and therefore higher XIRR) month on month? That question led me to develop a methodology I call the XIRR Win Rate.

The Limitation of the Current Scorecard

Rolling returns are arguably the most powerful tool available for fund comparison. They remove start-date bias by calculating returns across every possible investment period. Instead of asking "what was the 5-year return of this fund?", rolling returns ask "what was the 5-year return for every possible starting date?"

However, rolling returns are fundamentally a series of isolated lumpsum CAGR calculations. They are brilliant for measuring a fund manager's consistency across market cycles, but they have a blind spot when it comes to an ongoing investor’s cash flows.

As an investor, I am interested in something slightly different: what return would I actually have experienced with a continuous monthly SIP?

To understand why traditional rolling returns don't always capture this, consider a simple real-world scenario.

The "Two Friends" Experiment

Imagine two investors, Rahul and Amit, start investing on the exact same day.

• Both start an SIP of ₹10,000 on the 1st of every month.

• Rahul picks Fund A.

• Amit picks Fund B.

Starting from Month 12 (to ensure statistically valid annualization), both friends open their investment apps on the 1st of every month to compare their portfolio balances. Over a 5-year journey (60 months), two distinct patterns emerge:

1. Frequency (The Win Rate)

Out of 60 monthly check-ins, Rahul’s portfolio is larger than Amit’s in 45 months. Amit’s portfolio takes the lead in only 15 months.

This gives Fund A a 75% XIRR Win Rate. For three-quarters of their investing journey, Rahul was physically wealthier than Amit.

2. Dominance (The Lead Margin)

Now what if both funds had a 50% win rate, i.e. both were ahead of the other for 30 months? Win rate measures how often a fund leads, but not by how much. When we measure the actual rupee gap between their accounts:

• During the 30 months Rahul was ahead, his corpus was on average 20% larger than Amit's.

• During the 30 months Amit took the lead, his corpus was on average only 4% larger than Rahul's.

When Rahul won, he held a commanding lead. When Amit won, he barely scraped past before falling back into second place.

Conventional rolling return charts compress this entire lived experience into smooth, theoretical lines. They hide the fact that Amit spent four years looking at a portfolio that heavily lagged his peer. Because their SIP dates and amounts were identical, whoever held the higher corpus mathematically held the higher XIRR.

A Real-World Example: ICICI Largecap vs Nifty 100

Let’s apply this framework to real market data.

If we look at 5-year rolling returns from January 2014 to June 2026, ICICI Largecap beats the Nifty 100 approximately 80% of the time. By conventional analysis, it is a comfortable winner.

But what happens when we look at the lived experience of an SIP investor using the XIRR Win Rate?

If you had started a monthly SIP on January 1, 2014, and checked your portfolio every single month up to June 2026, ICICI Largecap beats the Nifty 100 96% of the time. (Note: Had you done a one-time lump-sum investment, ICICI Largecap would have given the higher corpus on every single month since the investment was made—a 100% Win Rate).

That gap between an 80% rolling win rate and a 96% XIRR Win Rate is significant. Rolling returns suggested a clear winner; XIRR Win Rate reveals an absolutely decisive one.

And as the "Two Friends" example highlighted, the magnitude of outperformance matters just as much as the frequency:

Metric	ICICI Largecap Wins	Nifty 100 Wins
XIRR Win Rate	96%	4%
Average Margin (Corpus gap)	+7.0%	+0.3%
Maximum Margin (Corpus gap)	+18.5%	+0.5%

When the Nifty 100 does win, its maximum historical advantage over the active fund was a microscopic 0.5% of the total corpus. When ICICI Largecap wins, the average advantage is 7% and the maximum is 18.5%.

Even an investor who chose ICICI Largecap and had to exit at the absolute worst possible moment—one of the rare 4% of months where Nifty 100 was ahead—faced virtually zero downside relative to the benchmark.

The magnitude of performance difference can be done with Rolling Returns as well, however we would need to look at different rolling return windows like 3 year, 5 year, 7 year, 10 year and their consistency and outperformance; and that would still be a theoretical result not the investor’s lived experience. whereas with the XIRR win rate, you can look at 2-3 different time windows that an investor is interested in.

Two Lenses: Complementary, Not Competing

I do not see the XIRR Win Rate as a replacement for rolling returns. I see them as complementary lenses:

• Rolling returns tell us: How consistently did the fund manager perform across isolated market cycles?

• XIRR Win Rate tells us: Across an ongoing, continuous timeline, how often did my cash flows actually generate more wealth in Fund A versus Fund B?

Combined with the magnitude of outperformance, this gives a considerably more complete picture of the historical investor experience.

Where to Access This Metric

I have made the interactive calculation engine publicly accessible at www.shwealth.in/xirrwr.

The model currently allows users to run this exact mathematical diagnostic across 50 major active and passive funds. To my knowledge, this specific approach—calculating XIRR Win Rate systematically across a continuous investment timeline and combining it with the average lead margin—is not currently available on mainstream mutual fund comparison platforms.