What is the difference between dividend reinvesting option and growth option in a mutual fund? Which will give better returns?
Both dividend reinvestment and growth options in a mutual fund allow compounding.
What is the difference between dividend reinvesting option and growth option in a mutual fund? Which will give better returns?
Revati Shankar, Chennai
Dividend re-investment as the name suggests is an option wherein dividend is automatically reinvested in the scheme itself, at an ex-dividend Net Asset Value (NAV). Meanwhile in the growth option, an investor does not want to receive any part of profits of the mutual funds before his redemption. In other words, both dividend reinvestment and growth options allow compounding.