Regulator tightens rule on mutual fund risky investments

China's top securities regulator said on Friday it will tighten regulation on subsidiaries of the country's mutual funds, to curb the explosive growth in areas of risky investments that it says were "blindly expanded" and that analysts say exist in a regulatory void.

The regulatory move came as the mutual funds have feverishly expanded their assets under management by setting up subsidiaries to invest in more risky nonstandardized assets such as private equity, the property market and the financing projects of local governments.

As of March, 79 mutual funds had set up such subsidiaries which have seen their asset under management surge to 9.84 trillion yuan ($1.5 trillion), according to data from the China Securities Regulatory Commission.