How do growth plans in mutual funds work on FYERS?

How Do Growth Plans in Mutual Funds Work On FYERS?

Growth plans are a mutual fund investment option where the earnings generated by the scheme such as interest, dividends, or capital gains are reinvested back into the fund instead of being paid out. Over time, this leads to a steady increase in the fund’s Net Asset Value (NAV) if the fund performs well.

Growth plans are well-suited for investors with long-term goals, such as retirement, education funding, or wealth creation, where compounding can significantly enhance returns.

Key Features of Growth Plans

  • No interim payouts: All gains are reinvested within the fund
  • NAV appreciation: Returns are reflected as an increase in unit value
  • Gains are realised only at redemption: No cash flow until units are sold
  • Tax is deferred: Short-term or long-term capital gains tax applies only when redeemed

Example:

Suppose you hold 100 units of a mutual fund at an NAV of ₹15. Your investment value is ₹1,500.

If the NAV increases to ₹16, the value of your 100 units becomes ₹1,600. Your unit count remains unchanged at 100 units, while the increase in value is reflected through the higher NAV.

Note: Growth plans are best for investors looking to grow their capital steadily over time without needing periodic income. Ideal for long-term financial planning.

What If...

ScenarioExplanation
You want regular incomeGrowth plans don’t pay out earnings.
You plan to invest long-termGrowth plans help compound returns effectively over time.
You track NAV growthThe NAV reflects the cumulative reinvested returns of the scheme.
You want to delay taxesCapital gains tax is applied only when you redeem the units, allowing tax deferral.

Last updated: 17 Nov 2025