Matthew Craig assesses diversified growth funds, absolute return funds that allocate to a range of asset classes alongside fixed income and equities

For pension funds, making sense of any new investment idea is a process that goes through several stages. Many questions have to be asked, from ‘does this idea make sense, or is it just a marketing fad?', through to ‘who should we appoint to do this for us?'

The rapid rise of diversified growth funds illustrates this. It is an idea that has gathered a head of steam over the last year or so, with an increasing number of funds now on offer.

Peter Gibson, an executive consultant in KPMG's investment advisory team, says the firm recently surveyed the diversified growth fund market and obtained 35 responses from fund managers.

Gibson comments: "We are always quite sceptical of fund managers that jump onto a bandwagon and 18 funds have been launched since