With an aim to safeguard mutual fund investors from high-risk assets, regulator SEBI has asked asset management companies to make all their investments in listed or to-be-listed equity securities.

The new framework comes after the Board of SEBI approved a proposal in this regard in August.Exposure to risky debt securities has emerged as a major risk for capital market investors, including those coming through the mutual fund route, and the regulator has been making efforts to enhance its regulatory safety net against such risks.

“All investments by a mutual fund scheme in equity shares and equity-related instruments shall only be made, provided such securities are listed or to be listed,” the regulator said in a notification dated September 23.

Besides, SEBI has allowed mutual funds to invest in unlisted non-convertible debentures up to a maximum of 10% of the debt portfolio of the scheme.This would be subject to such investments in unlisted NCDs having simple structures, being rated, secured and with monthly coupons.