Ch.7 · NAV Calculation Rules · medium
What happens to NAV when a mutual fund scheme declares an IDCW (dividend)?
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EXPLANATION
When a scheme declares IDCW, the NAV falls by the per-unit distribution amount on the ex-IDCW date. If NAV is ₹30 and IDCW declared is ₹5, ex-IDCW NAV becomes ₹25. This is a return of capital/income to investors, not a bonus — total wealth (units × NAV + cash received) remains the same before tax. The growth option avoids this NAV drop by retaining all income.
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