The spate of mergers and takeovers sweeping the UK is threatening the tracker fund industry, with the FSA saying that it will not waive investment restrictions on unit trusts, reports The Times.

An FSA spokeswoman yesterday said that the regulator would fully enforce the law forbidding trusts from investing more than 10% of their assets in a single stock. Instead, the FSA would compromise deals with tracker fund managers that would spare them having to seek investor approval for a portfolio not weighted in line with stock market indices.