What is IDCW in mutual fund 2023 ?

IDCW, or Income Distribution cum Capital Withdrawal, is a point offered by certain collective finances to give investors with regular income while also allowing them to withdraw a portion of their invested capital. IDCW finances generally invest in a blend of income- generating means similar as bonds, fixed- income securities, and tip- yielding stocks.

The income generated from these investments is distributed to investors periodically, frequently on a yearly or daily base. This distribution can be an seductive option for those seeking regular income aqueducts from their investments, especially retirees or individualities looking to condense their income.

How IDCW (Income Distribution Cum Capital Growth plan) works

Here how IDCW works.

  • Investment Allocation IDCW finances allocate a significant portion of their portfolio to income- generating means. This allocation ensures a steady sluice of income for investors.
  • Regular Income Distribution The income generated from the underpinning means is distributed among investors. This can be in the form of tips, interest, or other income sources.
  • Capital Withdrawal In addition to entering regular income, investors have the inflexibility to withdraw a portion of their original investment quantum. This point allows investors to pierce their capital while still serving from the income distributions.
  • Net Asset Value (NAV) Impact the NAV of IDCW finances can witness oscillations due to the regular income distributions and capital recessions. still, these oscillations are generally less pronounced than those seen in growth- acquainted finances.

IDCW vs Growth in collective fund.

IDCW vs Growth plan
IDCW vs Growth plan

first take an overview of what’s IDCW and Growth plan in collective fund

IDCW (Income Distribution cum Capital Withdrawal) Option in collective finances

The IDCW option, also known as the tip option, in a collective fund allows investors to admit periodic payouts in the form of tips. These tips are generally distributed from the gains or income earned by the fund through interest, tips, and capital earnings.

The investor can choose the frequence at which they admit these payouts, similar as yearly, daily,semi-annually, or annually. It’s important to note that these tip payouts can impact the growth eventuality of the investment because the earnings aren’t being reinvested back into the fund

Growth Option in collective finances

The growth option in a collective fund refers to a type of investment option where the returns generated by the fund are reinvested into the fund itself rather than being distributed to the investor as tips or payouts. In other words, any capital earnings or gains made by the fund aren’t incontinently paid out to the investor but are rather reinvested to increase the value of the investment.

This can lead to compounding growth over time. The value of the investment grows as the underpinning means appreciate, and the investor benefits from implicit capital earnings when they ultimately decide to redeem their investment.

Then’s the point wise comparison between the Growth and IDCW( income distribution cum capital pullout) option in collective fund

IDCW (Income Distribution cum Capital Withdrawal) Option

  • Tip payouts in the IDCW option, the collective periodically distributes tips to investors from its earnings, including interest, tips, and capital earnings.
  • Regular income Investors admit a sluice of income at the chosen frequency (yearly, daily, etc.) from the tips, furnishing regular income.
  • Impact on Growth tip payouts can potentially reduce the overall growth eventuality of the investment since the earnings are being distributed rather than reinvested.
  • Investor preference Suited for investors looking for regular income from their investments and are less concerned with maximizing long- term capital appreciation.
  • duty counteraccusations tip income may be subject to taxation, and duty rates can vary grounded on factors like the source of tips and original duty regulations.

Growth option

  • Reinvestment of returns In the growth option, the returns generated by the collective fund are reinvested back into the fund itself.
  • Capital Appreciation Any earnings or gains made by the fund contribute to the increase in the fund’s net asset value (NAV), leading to implicit capital appreciation over time.
  • No tip Payments Investors don’t admit periodic tip payouts under the growth option. rather, all earnings are reinvested for implicit long- term growth.
  • Compounding Reinvested earnings can compound over time, potentially leading to a larger overall investment value in the future.
  • Investor Preference Suited for investors seeking capital appreciation and willing to abstain immediate income in favor of long- term growth.
  • duty counteraccusations Capital earnings levies may apply when the investor ultimately sells their investment, depending on the holding period and original duty regulations.

Flash back that both options have their own advantages and disadvantages, and the choice between them depends on your individual fiscal pretensions, threat forbearance, and investment strategy. It’s always a good idea to probe and understand the specific terms and conditions of the collective fund you are interested in and consider seeking advice from a fiscal counsel before making any investment opinions.


In conclusion, IDCW( Income Distribution cum Capital Withdrawal) is a distinctive option within the realm of collective finances that caters to investors seeking a balance between regular income and capital preservation. This option allows investors to admit periodic tip payouts generated from the fund’s earnings, offering a harmonious sluice of income.

While IDCW can give fiscal stability and meet the income requirements of investors, it’s important to note that this choice may come at the expenditure of implicit long- term capital growth. By concluding for IDCW, investors can diversify their investment strategy to accommodate short- term fiscal pretensions and income conditions.

As with any investment decision, careful consideration of one’s fiscal objects, threat forbearance, and the specific collective fund’s performance is essential. Consulting with fiscal professionals can give precious perceptivity to make informed.

FAQ ( Frequently Asked Question )

  1. Is IDCW mutual fund good?

    Whether an IDCW (Income Distribution cum Capital Withdrawal) mutual fund is good depends on your need for regular income, lower risk tolerance, and shorter investment horizon. If you prioritize stable payouts and can accept potential limitations on long-term growth, an IDCW fund could be suitable.

  2. Should I invest in IDCW?

    Investing in IDCW (Income Distribution cum Capital Withdrawal) funds is advisable if you seek steady income and have short-term financial needs. However, if your main goal is long-term capital growth, other investment options might be more appropriate.

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