IDCW in a mutual fund stands for Income Distributed to unit holders from the fund's investments. This is a share of the fund's earnings that investors can choose to receive or reinvest.
IDCW involves distributing a mutual fund's earnings to investors based on their held units and the fund's decided per-unit distribution
For example, if a mutual fund has earned substantial profits, it might distribute ₹10 per unit as IDCW. So, if an investor holds 1,000 units, they would receive ₹10,000 as IDCW.
IDCW payout involves transferring IDCW funds to investors, following a schedule based on fund type - monthly for debt funds and annually for equity funds. Payouts are deposited directly into the investor's linked bank account.
The growth option in mutual funds reinvests all profits, increasing the fund's Net Asset Value (NAV) over time.
Conversely, the IDCW option provides regular profits to investors, reducing the NAV of fund units. This is ideal for those wanting consistent investment income.