6.7.4 Investment Policy of LIC’s Mutual Funds
The main objective is to discuss the investment policy as disclosed by the mutual fund offer documents and as reflected in the asset allocation at the end of the accounting year. This is
of vital importance to the investor in determining the returns and it is this era the expertise in fund management is put to test.
An investment policy in concept may be regarded as a verbalized version of a definite course of action to be pursued by a mutual fund in regard to its investments. For implementing a policy so evolved, a decision or a set of decisions will have to be taken which may be regarded as policy decisions. For instance, a mutual fund or an income oriented scheme may decide not to invest more than 30% of its funds in equity shares and for a growth scheme, not to invest more than 40% of its funds in deb...
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...nclude the following statement in the offer documents.
“Mutual Funds and securities investments are subject to market risks and there can be no assurance or guarantee of returns by the trustees sponsoring institutions. The returns mentioned are not guaranteed but only indicative, based on the investment policy of the fund.”
The above statement is a highly generalized one, which indicates the external realm of investments and markets, but each scheme should state about the risk factors more clearly.
The offer document of Dhanaraksha (5) of LIC Mutual Fund launched in June 1992, has specified about investment policy of the scheme as follows:
The scheme being income and growth oriented, the proposed investment pattern of the funds collected would be as under:
Debentures/ Bonds 70 to 75%
Equities 15% to 20%
Money Market Instrument 10% to 15%
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