Here's how LIC policyholders can get discounted IPO share

I discontinued paying premiums after two years from the date of taking the LIC policy. Am I eligible to apply for a reserved quota in the upcoming LIC IPO? Vegunta Satyam, Eluru

Life Insurance Corporation of India's IPO will witness the most significant participation in the history of Indian markets. The IPO from LIC is expected to open for the public on 11 March 2022. Life Insurance Corporation of India (LIC) is the largest life insurer with a 65 per cent market share in terms of premium and 75 per cent market share in terms of the number of individual policies issued during 2021. LIC booked revenue of 7 lakh crores with three thousand crores profit. The life insurance sector recorded a growth rate of 10 per cent CAGR during 2016-2021. The growth rate of the total premium is estimated at 14 per cent CAGR during 2022-2027. Life Insurance Corporation is one of the most prominent investors in India's equity markets, with its investments ranging from 4 to 5 percent of the total market capitalization of the National Stock Exchange. LIC's total AUM (asset under management) as of the end of FY21-22 was Rs 36 lakh crore.

As per its Red Herring Prospectus filed with SEBI, LIC is offering 5 per cent government ownership to the public through its IPO. Under the Policyholder Reservation Portion, approximately 10 per cent of the total IPO will be reserved for eligible policyholders of LIC. To apply for the IPO, every individual investor, including LIC policyholders, must have a Demat account. LIC policyholders may get some discount. However, no retail investor, including policyholders, can apply for more than Rs 2 lakh worth of equity shares. The PAN number of the policyholders applying for the LIC IPO needs to be updated in the policy records with LIC. Linking of PAN can be done online and offline at the branch. In the case of a joint insurance policy, any of the joint policyholders can apply for shares in the IPO. One of the spouses will be eligible for participation to get the reservation under the Policyholder Reservation Portion. However, the Demat account is a must in the name of either of the spouses. All existing LIC policyholders expect policies that were matured, surrendered, or received death benefits are eligible for policyholder reservation. According to LIC's Red Herring Prospectus, to be eligible, the policy should have been issued on or before the date of the prospectus and should not have exited by way of surrender, maturity or death claim on the bid or offer opening date. Also, nominees under the policies are not eligible for the reservation.

Are ETFs safe and attractive investment options in India? - Sarath Reddy, Proddatur

One can consider investing in Exchange-traded funds (ETFs) to diversify a portfolio provided one understands the nitty-gritty of risk and rewards associated with ETFs. There are several types of ETFs, each with a different investment focus. Equity ETFs, Fixed-income ETFs, Gold ETFs, Silver ETFs, Foreign exposure ETFs are some of the most common ETFs in India. Exchange-traded funds track the price of an index or commodity, or underlying asset. An ETF is a collection of shares, money market instruments, bonds, currency, commodities, and other securities. ETFs often track an underlying asset. The features that ETFs possess are commonly ascribed to mutual funds, stocks and bonds.

However, ETFs are more similar to mutual funds concerning nature, diversity, structure, management and regulation. ETFs are nothing but pooled investment products. ETFs can be traded on NSE/BSE like shares and bonds. Like stocks, the price of an ETF changes based on supply and demand. There will be brokerage on buy and sell ETF units. The transaction costs of ETFs are minimal and lower than index mutual funds. ETFs are considered a safer investment vehicle for risk-averse investors seeking market-linked returns. Exchange-traded funds (ETFs) were first introduced in the United States in 1993. Benchmark Asset Management Company brought the first ETF on the Nifty 50 Index in India in January 2002. Gold ETFs, silver ETFs are often associated with liquidity issues, difficult to trade or buy and sell in gold, silver ETFs, which often cause inconvenience to investors. On the Income-tax front, the tax treatment of ETFs varies from type of ETF.

Gains on equity ETFs will be treated the same as gains from individual stocks. Short-term gains on gold ETFs, silver ETFs, if sold within three years of purchase, will be clubbed with investors income and taxed as per the investor's slab rate. With indexation benefits, long-term capital gains on gold and silver ETFs will be taxed at 20 per cent. Like any other investment class, investments in Exchange-traded funds involve some degree of risk. One should carefully consider the risks of different Exchange-traded funds. Some ETFs tend to be more volatile than an ETF that tracks the broader market. Do not invest blindly without understanding the risks and returns of any asset class or investment vehicle, including the ETFs. However, a growing number of traders and investors weigh towards exchange-traded funds to build diversified portfolios and to make use of various potential advantages that ETFs offer.

(The author is a SEBI licensed Research Analyst. The alumnus of the Indian Institute of Foreign Trade (IIFT), he had held leadership roles at National Geographic, Reliance Radio Television Luxembourg, STAR TV, etc)