Growth vs IDCW (Dividend) Option
Updated 26 Aug 2026
Each scheme offers a growth option and an IDCW option (Income Distribution cum Capital Withdrawal — what used to be called the dividend option). The portfolio is identical; only what happens to gains differs.
How they diverge
- Growth: all gains stay invested, so NAV rises and compounding is uninterrupted.
- IDCW: the fund periodically pays out part of the NAV, which permanently reduces NAV by the amount paid.
IDCW is not extra money
The name change from 'dividend' to IDCW was deliberate. A payout is not profit generated on top of your investment — it is a withdrawal from your own capital and gains. Receiving ₹5 per unit drops your NAV by ₹5.
The tax difference matters
Since 2020, IDCW payouts are added to your income and taxed at your slab rate, with TDS applicable above a threshold. Growth-option gains are taxed only when you redeem, and at capital-gains rates that are usually lower. Deferral alone is a meaningful advantage.
Why we exclude IDCW plans from rankings
Because payouts reset NAV, multi-year CAGR computed from an IDCW NAV series understates the fund's actual performance and isn't comparable to a growth series. Ranking both would also list every scheme twice.
Frequently asked questions
Which is better, growth or IDCW?
For most long-term investors, growth. IDCW payouts are taxed at your slab rate as income in the year received, and money paid out stops compounding. If you need regular cash flow, a Systematic Withdrawal Plan from a growth option is usually more tax-efficient.
Why is the IDCW option's NAV lower than the growth option's?
Because every payout is deducted from NAV. The IDCW option isn't performing worse — its returns have simply been partly handed back to you in cash rather than left to compound inside the fund.