Illegal funds purporting to offer investments in foreign assets and guaranteeing high returns have succeeded in tricking some investors, said the State Administration of Foreign Exchange (SAFE) on Monday.

The illegal funds used pyramid selling techniques, said SAFE. The pyramids would quickly collapse once money stopped flowing in, spelling disaster for investors, SAFE warned.

The administration asked investors to be alert to the risks.

China Central Television (CCTV) reported last month that an illegal fund named Switzerland Mutual Fund had promised Internet investors a hefty 300 percent yield within 450 days.

Claiming to have been founded in 1948, the fund has raised over 100 million yuan (US$12.9 million) on the mainland since it entered the market last year.

But, according to CCTV, the fund has never been approved by the China Securities Regulatory Commission.

Currently, Chinese individuals who want to invest abroad can only buy investment products provided by banks and fund management companies under a qualified domestic institutional investor scheme.

(For more biz stories, please visit Industry Updates)