Can someone explain types of IDCW?

[Micro]

Can someone explain the types of IDCW? Especially, I am unable to understand what is IDCW payout and IDCW interim…

@ShubhS9 @siva-reddy

[neha1101]

What is IDCW in Mutual Funds | Mirae Asset

A detailed explanation is given in the attachment.

[Micro]

Thanks a lot Neha,

I already know what IDCW stands for and how it works. However, the types of IDCW are not explained in the above link as far as I know. I tried searching that on the internet and after not finding the answer, I posted the query here.

[cvs]

@Micro

Can someone explain the types of IDCW?

What “types” did you come across which you want to differentiate between?
Maybe you can share a link or screenshot ?

[ShubhS9]

@Micro

Can someone explain the types of IDCW? Especially, I am unable to understand what is IDCW payout and IDCW interim…

These couple of posts will give you a better idea:

Change in mutual fund Riskomters and renaming of dividend plans of mutual funds

SEBI issue 2 new circulars yesterday on riskometers and dividend plans. 1. Change in Riskometer From Jan 2021 mutual fund riskometers will have 6 levels instead of the 5 earlier. Here are the 6 levels: Low Risk Low to Moderate Risk Moderate Risk Moderately High Risk High Risk Very High Risk Mutual funds will now review this every month and disclose this along with the month portfolios of schemes. Full circular 2. Renaming of dividend plans in mutual funds This is a particularly big pro…

Here's why dividend mutual funds are a bad deal for you

Here’s a good video where Mr.Parag Parikh explains why mutual fund dividends are bad for you. Also, read

[Udit_Khuranna]

1. IDCW Payout (Income Distribution cum Capital Withdrawal Payout):

• Description: In this type, the mutual fund periodically pays out income to investors from the profits it has generated.
• Investor Impact: Investors receive the payout in the form of cash directly into their bank accounts. This is suitable for investors looking for regular income.
• Example: If a fund declares a 1% IDCW payout and you hold units worth ₹1,00,000, you would receive ₹1,000 in your bank account.

2. IDCW Reinvestment (Income Distribution cum Capital Withdrawal Reinvestment):

• Description: Instead of paying out the income as cash, the mutual fund reinvests the income to purchase more units for the investors.
• Investor Impact: Investors do not receive cash but get additional units equivalent to the payout amount. This helps in compounding as the number of units held increases.
• Example: If a fund declares a 1% IDCW reinvestment on units worth ₹1,00,000, additional units worth ₹1,000 would be added to your account based on the current NAV.

3. IDCW Interim (Income Distribution cum Capital Withdrawal Interim):

• Description: This refers to periodic payouts that can happen at intervals other than annually, such as monthly, quarterly, or half-yearly.
• Investor Impact: Investors receive income at regular intervals, which can provide a steady stream of cash flow. It can be either in the form of payouts or reinvestments, depending on the option chosen by the investor.
• Example: If a fund declares an interim IDCW payout every quarter, investors receive income every three months. If the fund declares an interim IDCW reinvestment every quarter, additional units are credited quarterly.