In contrast, the CAGR shows that the investment generated negative returns over its full time horizon. Disadvantage of CAGR : Smoothing and Risk One disadvantage of the Compound Annual Growth Rate is that it assumes growth to be constant throughout the investment’s time horizon. The CAGR full form is compounded annual growth rate. Simply put, it is the average number of an investment’s return over a period of time - like 3 years, 5 years, 7 years, or 10 years. Compound annual growth rate (CAGR ) is a financial investment calculation that measures the percentage an investment increases or decreases year over year. CAGR , or Compound Annual Growth Rate, measures investment growth annually over time, offering a realistic view of returns and performance. Know more about what is CAGR in mutual fund.
