New Delhi, Oct. 21 -- If you invest in mutual funds, you may have noticed two options under the same scheme: Growth and Income Distribution cum Capital Withdrawal (IDCW). While both options invest in the same underlying portfolio, they differ in how earnings are handled, which can affect your cash flows, the number of units you hold, and the way your investment grows over time.

Understanding these differences is important when comparing mutual fund returns. A higher or lower Net Asset Value (NAV) does not, by itself, indicate which option has delivered better returns. Investors must also account for distributions and the reinvestment of payouts.

Growth option: Under this option, earnings remain invested in the scheme rather than being d...