A compound annual growth rate (CAGR) measures the rate of return for an investment — such as a mutual fund or bond — over an investment period, such as 5 or 10 years. The CAGR is also called a "smoothed" rate of return because it measures the growth of an investment as if it had grown at a steady rate on an annually compounded basis. To calculate CAGR, use the XIRR function.
Example
![An example of XIRR function](https://support.content.office.net/en-us/media/fcee4d0c-b00c-45b0-a782-c2294cf83cd0.png)
Note: When you compare the CAGRs of different investments, make sure that each rate is calculated over the same investment period.