``Christened PNB Liquid Fund 1998, the scheme is likely to open for subscription by mid-October,'' said a senior official at the AMC. This will be the first open-end debt scheme from the PNB AMC. An equity-linked savings scheme, EGF '96 was the last fund from the AMC and garnered close to Rs 9 crore.

PNB Liquid Fund is probably the first scheme to seek Sebi's approval for investment in derivatives. According to the draft offer document, the fund can invest upto 10 per cent in derivatives as a tool for risk management.

Trading in derivatives is likely to take-off soon with the bill awaiting clearance from Parliament. The National Stock Exchange has prepared the ground for launching derivatives trading andenrolled brokers to impart training in various instruments.

PNB AMC is faced with a shrinkage in corpus on account of repurchase in the existing schemes. Between 1995 and 1997, the corpus has dropped by Rs 88 crore from Rs 448 crore to Rs 361 crore. ``PNBMF plans to launch a slew of schemes to buoy the corpus. We intend to launch these funds by March, 1999 and include an open-end balanced fund and a short-term debt fund,'' the official added. The short-term debt fund (or quasi-MMMF) is likely to be targeted at high-netwroth individuals and corporates.

The AMC also plans to launch an equity-linked savings scheme, depending on the prevailing scenario and investor appetite. The open-end debt fund will entail a minimum investment of Rs 5,000 and will open for fresh sale and repurchase of units from the 31st day from the date of allotment. The fund carries growth and regular dividend options and will offer systematic investmwnt and withdrawal plans.

The scheme does not carry any entry or exit load during theinitial offer period and all issue expenses will be borne by the AMC. The recurring expenses are likely to be pegged at 2.25 per cent of the average weekly net assets (upto a corpus of Rs 100 crore) with an investment management fee of 1.25 per cent.

The scheme can invest upto 100 per cent in debt instruments while upto 50 per cent of the corpus can be allocated to money market instruments. The Liquid fund is likely to scout for overseas securities with a maximum investment of 10 per cent of the corpus. The approval for investments in overseas markets by Indian mutual funds is awaited. Besides, it can invest upto 10 per cent in derivatives. Under normal circumstances, the portfolio turnover will not exceed 7-8 times, once the entire corpus is invested.

The launch of open-end debt funds is beginning to catch up with public sector AMCs after Unit Trust of India launched its bond fund earlier this year. SBIMF also plans to launch its open-end income scheme by mid-september. So far, public sector AMCs havebeen concentraing on closed-end income funds, a number of which assure returns.

``Besides helping AMCs move away from assured returns, open-end income schemes continue to attract money on a regular basis. They also help curtail expenditure which otherwise, AMCs have to bear with the launch of a new closed-end fund,'' said an analyst. Currently, there are around 15 open-end income schemes with a combined corpus of over Rs 1000 crore.