INVESTMENT TRENDS.

Auckland Star, Volume LXX, Issue 109, 11 May 1939, Page 8

INVESTMENT TRENDS.

LIFE ASSURANCE FUNDS, i COMPANY SHARES INCLUOED. IN BRITAIN. Ordinarily in, Australia and iu Ned Zealand the fuuds of life assurance organisations are invested in Government aud municipal securities, in mortgages, and in loans on policies. Rarely is there an investment to any considerable extent in shares. In Great Britain the National Mutual Life Assurance Society has invested a considerable amount of ite lurida in shares, necessarily of the best class of companies, and has been well satisfied with, results. It will be remembered that thia class ot investment found a strong advocate in a former chairman, Mr. J. M. Key nee. At the annual meeting of the company recently the present chairman, Mr. Francis X. C-uizoii, related the experiences of the society in this regard. During the year, lie said, the society had substantially reduced its, holding of British Government securities, and there had been an approximately corresponding increase in amounts! deposited with building societies. This was in accordance with the board's desire iu prurient circumstances to keep a larger than normal investment in the form ot" J •'shorts'' and it had been achieved not only j without luss of income, but even with a! tiiuall improvement. Holdings of prefer-! cnee shares had also been considerably j reduced partly as a result of depreciation, ' but also by deliberate policy. The board had come to the conclusion | that thin class of investment carrying as I it did none of the advantages of debentures;! or ordinaiy shares and most of their dis- : advantages had figured rather too ' prominently of recent years in the portfolio. This process of reduction had been carried further since the close of the year. The various categories of non-Stock Kxchauge assets had mostly shown I increases in line with' a desire to reduce i dependence on the vagaries of the Stock I Exchange and to increase that most desir- ! able form of investment for a life ollice, j namely, mortgages. J The course of prices in 1938 was again : inimical to all investment institutions and the society had not avoided and could not avoid the universal depreciation. According to the "Actuaries' Investment Index,"' , 2% per cent Consols fell last year by ->6 j per cent, debentures 2.7 per cent, and preference shares by B.S per cent, while ; ordinary shares lost no less than 16.7 per \ cent of their values at the end of 1037. I In the society's cane it suffered a shrink* i :\uo in value of £245,266, equal to 3.2 perl cent of total mean assets, a result which, ! in face of the above figures, the board j regarded as being not unsatisfactory. I "The investment of a moderate percent- ! age of total assets in ordinary shares has now received,." Mr. Curzon said, "a sufficient measure of recognition as to be labelled orthodox. Certainly in our own case there is no doubt as to the benefieient results of title policy followed now over a period of 17 years, for the accumulated I capital train has been very substantial, j while the investments have yielded a! definitely hiirher income. Nevertheless, the I need for stability of income acts as a ! restraining influence on the class of ■ ordinary share which can be considered as j suitable. At the date of the balance- | sheet our total investment in ordinaiy ' hliui'Pm was at the moderate level of 1 i per emit of our total assets. though rctlliillv nearly a third of the holdings were in gus. electricity and water companies, banks and insurance/' I