While the Savings Portfolio is targeted at retail investors, the Treasury Portfolio is aimed at corporate and high-networth clients. The two are no-load funds with the initial issue expenses being borne by the AMC.

ING Savings Trust has been sponsored by the ING Group, which is one of the world's largest providers of diversified financial services - combining banking, insurance and asset management. Till December 31, 1998, the group had assets worth Rs 12,00,000 crore under management.

The two schemes are expected to open shortly for subscription. The schemes will be probably be the first liquid plans to hit the market after the Reserve Bank of India's credit policy on October 29. RBI has allowed liquid plans, gilt schemes and money-market mutual funds to provide cheque writing facility to investors. However, these liquid plans need to invest at least 80 per cent of their corpus in money market instruments to offer a cheque writing facility.

Although the two schemes are not offering this facility now, they may do so in future, subject to the approval of the board of Trustees. The funds can also enter into interest rate swaps and forward rate agreements, which are hedging mechanisms, subject to a nod from the trustees.

The AMC is attempting to attract retail investors in the Savings Portfolio and has pegged the minimum investment at only Rs 5,000. Currently, there are 12 short-term debt funds but most of these funds have minimum investments ranging from Rs 25,000 to Rs 1 lakh. JM High Liquidity Fund is the only fund with minimum investment at Rs 1,000 while SBI MF's Magnum Insta Cash needs a minimum investment of Rs 10,000. On the other hand, most of the government security funds have minimum investment ranging from Rs 5,000 to Rs 10,000.

``These funds are essentially meant for corporates to park their short-term surplus to earn a higher rate of return than bank deposits. However, with cheque writing facility, funds are now attempting to woo retail money from savings accounts,'' says an analyst.

``A separate plan for retail investors will help the fund manager get long-term money and help generate higher returns,'' he adds.

Savings Portfolio will also give tax-breaks under section 54EA and EB to attract some long-term money into the fund. Under section 54 EA, investors can invest the entire proceeds from the sale of an asset in the fund for a period of three years. This makes capital gains, arising from the sale of the asset, tax-free. Under section 54EB, investors can put the capital gains earned from sale of an asset in the fund for a period of seven years to avoid paying tax on these gains.

With the Savings Portfolio targeted at retail investors, the fund aims to generate higher returns by deploying upto 40 per cent of the corpus in debt securities. The fund can take upto 80 per cent exposure in money market instruments. Besides, if the fund offers cheque writing facility, it will have to invest at least 80 per cent of its corpus in short-term instruments.

On the other hand, the Treasury Portfolio has a minimum investment of Rs 10 lakh. The fund can have up to 95 per cent of its investments in money market instruments while only up to 20 per cent of its corpus in debt securities.