Ch.2 · Mutual Fund Structure Basics · medium
What was the rationale for SEBI renaming the 'Dividend' option to 'Income Distribution cum Capital Withdrawal (IDCW)' in 2021?
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EXPLANATION
SEBI renamed the Dividend option to IDCW in April 2021 to clarify to investors that the payout is not purely 'dividend income' — it often includes return of the investor's own capital (from NAV reduction). The name change aimed to prevent the misconception that IDCW payouts are a form of profit-sharing similar to company dividends.
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