Ch.2 · Mutual Fund Structure Basics · medium
What is the key difference between a Growth option and an IDCW (Income Distribution cum Capital Withdrawal) option in a mutual fund?
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EXPLANATION
In the Growth option, all profits are reinvested back into the scheme, increasing the NAV over time. In the IDCW (formerly Dividend) option, distributable surplus is paid out to investors periodically, reducing the NAV by the distribution amount. Growth suits long-term wealth creation; IDCW suits those needing periodic cash flows.
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