Main Features Of Investment Policy Essay

850 WordsDec 19, 20164 Pages
Main features of investment policy of LIC are as under:  The crux of the Corporation‟s investment policy should be that the funds shall be invested in such a manner as to safeguard and promote to the maximum extent possible the interest of the policy holders. The larger interest of the country should not, however, be ignored. 249  Investments should be dispersed over different classes of securities, industries and regions. The Corporation‟s policy has been not to acquire more than 30 percent of the outstanding equity shares of company.  The Corporation should act purely as an investor and not assume the role of an operator or speculator and try to take advantage of temporary fluctuations in the market prices.  The Corporation would underwrite security issues after careful investigation of the project from financial, economic, technical, managerial and social angles. Another notable feature of underwriting of the LIC is that the Corporation‟s participation in underwriting is in the form of „firm‟ underwriting in the sense that it underwrites issue of capital invariably by way of firm commitment. Through underwriting, it purchases a large block of sound securities for its investment portfolio. The approach of the LIC in this regard is that of an investor and one of a catalytic agent to generate public subscriptions. Furthermore, it is the policy of the Corporation to lay relatively more emphasis on senior securities because fixed return and preferential

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