A person who is investing in mutual fund is either looking for constant return which is dividend or he or she is looking for capital appreciation of the money invested in mutual funds. People who are looking for capital appreciation should invest into growth reinvestment mutual fund.
A growth reinvestment mutual fund is one in which the investor do not receive any dividend from mutual fund in which he or she has invested. In stock market blue chip companies pay regular dividends but a person who has invested into growth reinvestment mutual fund is basically saying that I do not want those dividends; I rather want that dividend to be reinvested into equity again. In case of dividend re-investment option, the mutual fund declares dividend, but the investor who has selected the reinvestment option does not get any dividends but the amount of that dividend is re-invested into the same fund.
Growth reinvestment mutual fund is ideal for those investors who are young or those who do not want constant income and are willing to forgo the dividend in order to gain in future from capital appreciation. Therefore any person who is looking to select this option should first look into his or her investment objective, and also particulars of the mutual fund in which one is planning to invest and then select that mutual fund.