What are Growth and IDCW options?
Within one scheme and one plan (Direct or Regular), the same portfolio is offered in two options. Growth reinvests every gain inside the fund, so the NAV climbs and you realise the gain only when you sell. IDCW stands for Income Distribution cum Capital Withdrawal, the current name for the old dividend option. The fund pays out part of its assets from time to time, and each payout lowers the NAV by the amount paid.
The word “dividend” was dropped because the payout is not guaranteed income. It can come out of your own capital as well as from profits. Paying out ₹4 per unit does not create ₹4 of new value, it moves ₹4 from the fund’s NAV into your bank account.
A real comparison
The same scheme in both options holds the same portfolio, so the difference in NAV comes only from payouts. Here are two real direct-plan schemes on 2026-10-23.
| Scheme | Growth NAV | IDCW NAV | Payouts made | Total paid per unit |
|---|---|---|---|---|
| ICICI Prudential Value | ₹479.92 | ₹108.35 | 9 | ₹30.13 |
| Parag Parikh Flexi Cap | ₹88.9695 | ₹88.9699 | 0 | ₹0.00 |
ICICI Prudential Value has paid out 9 times, ₹30.13 per unit in total, mostly each March. Its Growth NAV is ₹479.92 while the IDCW NAV is ₹108.35, so the Growth NAV is 4.43 times higher. The two NAVs are not comparable as a measure of value: the IDCW unit has had money taken out repeatedly, and the Growth unit has not.
Parag Parikh Flexi Cap has no recorded payouts, so its two NAVs are essentially the same, ₹88.9695 for Growth against ₹88.9699 for IDCW. Where a fund never pays out, the two options behave the same and the choice makes no difference.
How big is a payout?
The latest payout for ICICI Prudential Value was ₹4.00 per unit, with a record date of 2025-03-20. Against today’s IDCW NAV that is about 3.7%. It is not a yield on your investment: the amount is deducted from the NAV on the ex-payout date, so your holding in the fund falls by that amount and the same amount reaches your bank. The payouts are also irregular. They ranged from ₹1.00 to ₹4.15 per unit over about 10 years, and some years had none at all, so the fund does not promise any amount.
Which is better?
For wealth building, Growth is usually simpler. All gains compound inside the fund, and you decide when to sell and so when to pay tax. With IDCW, each payout is taxed in your hands as income when it is paid, whether or not you needed the money, and the money paid out stops compounding unless you reinvest it yourself. IDCW suits someone who wants a periodic cash flow, but a payout is not extra return: it is your own money handed back.
Never judge an IDCW fund by its payouts alone. A fund can only pay out what it has, and a high payout rate can simply shrink the NAV. Compare total return, which adds the payouts back to the NAV, using CAGR.
Frequently asked questions
Is IDCW the same as the old dividend option?
Yes. IDCW, Income Distribution cum Capital Withdrawal, is the current name for the dividend option, renamed because a payout can include a return of your own capital.
Are IDCW payouts taxed?
Payouts are taxed in your hands as income. The details change over time, so check the current rules or ask an adviser.
Can I switch from IDCW to Growth?
Yes, but a switch is treated as a redemption and a fresh purchase, so it can trigger tax and exit load.
WHAT THIS MEANS FOR YOU Choose Growth unless you specifically need regular payouts. A payout does not make a fund better, and the NAV of an IDCW option will look low compared with its Growth sibling because of the money already paid out. Compare funds on total return, not on NAV.
METHODOLOGY NAVs as of 2026-10-23 and IDCW payouts by record date, from the Punji fund database and IDCW payout history (direct plans). Taxation described in general terms; check current tax rules or consult an adviser. Not investment advice.