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Mutual fund growth vs IDCW plans: Top 5 schemes’ returns compared, NAV differences — What investors should know
Mint 1 hr ago·21 Oct 2026, 10:31 am
Mutual fund investors often face a choice between Growth and IDCW (Income Distribution cum Capital Withdrawal) plans. The Growth option reinvests all earnings, increasing the number of units held and the Net Asset Value (NAV). In contrast, the IDCW plan distributes a portion of the earnings to investors, reducing the NAV but providing immediate cash flow.
For investors focused on long-term wealth creation, the Growth option is generally preferred because it allows for compounding. While the NAV of an IDCW scheme may appear lower, the total returns, including the distributed dividends, can be comparable to the Growth option. Therefore, comparing only the NAV is misleading.
Investors should evaluate their financial needs and investment goals. If regular income is a priority, the IDCW option might be suitable. However, for those seeking maximum capital appreciation over time, the Growth option is the better choice. Always compare the total returns over a consistent period rather than looking at the NAV in isolation.
Excerpt from Mint
Growth and IDCW options handle mutual fund earnings differently, affecting payouts, units held and NAV. Returns across three equity schemes show similarities, but NAV alone cannot determine which option performs better. Here's how investors should compare total returns and choose. If you invest in mutual funds , you…Read the original at Mint
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