The ING Structured Income Fund invests in Tier-2 medium-term notes issued by Public Bank and AmBank and an option for additional variable returns.

With an approved fund size of 500 million units, it will be distributed at RM1 per unit from yesterday until Nov 26. The minimum initial investment is RM25,000 and the subsequent minimum additional investment is RM5,000.

ING Funds chief executive officer and chief investment officer Datuk Steve Ong said the fund was designed to give investors annual coupons in ringgit, potential additional variable returns and return of their invested capital.

He said the fund aimed to pay a coupon of 3.3% per annum for the first five years and 5.3% per annum thereafter until its termination or maturity.

“The fund is structured to provide additional returns based on the performance of a selected basket of (Asian and commodities) indices,” Ong said in a statement, in conjunction with fund’s launch here yesterday.

The indices are Hang Seng China Enterprises Index, Taiwan TAIEX Index, MSCI Singapore Cash Index, S&P GSCI Crude Oil Index, S&P GSCI Industrial Metals Index and S&P GSCI Precious Metals Index.

Public Bank managing director Tan Sri Tay Ah Lek said given the current low interest rates and recent run-up in the equity market, the fund was ideal for retail customers seeking fixed annual income, potential additional returns and return of invested capital. He said it was suitable for investors with moderate risk tolerance and a mid-term investment horizon.

AmBank group managing director Cheah Tek Kuang said this was the first product in the country that was conceived on the back of the combined credit and market strength of two Malaysian banks. “This is a timely proposition as the financial sector will be at the forefront of the Malaysian economic recovery,” he said.

This article appeared in The Edge Financial Daily, October 29, 2009.