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IDCW full form is Income Distribution Cum Capital Withdrawal. It is the current regulatory name for what was earlier called the “dividend” option in mutual funds. In this option, a scheme periodically pays out a portion of its surplus or capital to investors (in proportion to the unit holding). 

In India, when investing in a mutual fund, most schemes offer two options: Growth and IDCW. Although both invest in the same portfolio, they differ in the way returns are handled. 

Under the Growth option, any gains earned by the scheme remain invested, and investors do not receive periodic payouts. Potentially, this allows the fund's Net Asset Value (NAV) to grow over time. This option is generally chosen by investors with a long-term wealth creation objective. 

On the other hand, some investors may prefer regular cash receipts instead of allowing all gains to remain invested. For such cases, mutual funds offer the IDCW option, under which the scheme may distribute money to investors whenever it has a distributable surplus. 

Need more clarity? Read this article till the end to understand what IDCW is in a mutual fund​​, how it works, and its different types.

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