In an IDCW (Income Distribution cum Capital Withdrawal) scheme, the NAV drops by close to the per-unit amount the fund pays out as a dividend — that money leaves the scheme's assets and reaches you, instead of staying invested and compounding. Rupeezy currently offers mutual funds only in the Growth plan, so this drop never happens to a fund you hold here.
What's the difference between a Growth plan and an IDCW plan?
Every mutual fund scheme is available in two plans that hold the exact same portfolio and follow the exact same strategy — the only difference is what happens to the gains:
- Growth plan — nothing is paid out. Gains stay inside the fund, so the NAV itself rises as the portfolio grows.
- IDCW plan — the fund house periodically pays out part of the scheme's gains as a cash dividend to unit holders, either straight to your bank account or reinvested as new units, depending on the option you picked.
Why does NAV fall when a fund declares a dividend?
An AMC declares a dividend per unit on the record date; on the ex-dividend date, that amount is deducted from the scheme's assets and paid out, so the NAV drops by roughly the payout amount — the same way a stock's price adjusts down on its own ex-dividend date.
For example: an IDCW scheme's NAV is ₹20 the day before it declares a ₹1-per-unit dividend. The next day, its NAV opens at around ₹19, and the ₹1 either lands in your bank account or buys you new units, depending on your payout option.
Important: This isn't a loss. The ₹1 that used to sit inside the fund (and would have shown up in the NAV) is now outside it, in your hands. Your unit value plus the payout received is the same right after the dividend as it was right before it.
Does this affect funds I hold on Rupeezy?
No. Rupeezy currently offers mutual funds only in the Growth plan — gains stay inside the fund and compound into its NAV, so there's no separate dividend payout event to reduce it. If you see an IDCW NAV mentioned elsewhere, in a fund fact sheet or a comparison table, it's describing the scheme's other plan, not the one you'd hold on Rupeezy.
Things to keep in mind
- "Growth plan" here isn't the same thing as a "growth fund." A growth fund is an equity fund style that invests in high-growth-potential stocks instead of high-dividend-yield ones. Growth plan is the payout option this article covers — every scheme, growth-style or not, can be bought in a Growth or an IDCW plan in the broader market.
- See What is NAV and how does it go up or down? for how NAV moves day to day from portfolio performance alone — the IDCW payout described here is a separate, one-off event on top of that.
- See What does NAV mean? for the NAV formula.