Most fund managers believe that greater freedom to construct portfolios would improve their performance, according to research by Hewitt, Bacon & Woodrow, the consultants.

A survey of 40 UK fund management firms found that 70% of them felt restricted in their stock selection by the method their clients use to track performance. Instead of being measured against an index, the managers want to be handed unconstrained mandates that would enable them to buy only the stocks they find attractive. At present they have to buy large constituents in an index, regardless of their conviction in them.