The Securities and Exchange Commission recently announced it will examine the marketing practices of firms offering target-date retirement funds, which left many investors with unexpected losses in 2008.

Meanwhile, the Obama administration says target-date funds should be the default option for people who would be automatically enrolled in IRAs at work. Workers could choose alternatives, but experience with 401(k)s shows many workers stick with whatever funds they start with. The administration thinks the target-date approach is better than defaults like a conservative bond fund or money market fund. Matching a target-date fund to each worker’s age would be better, the administration thinks, than having the same default option for young and old alike.

So which is it? Are target-date funds good or bad?

They can be either. Clearly, some fund companies did not warn investors of possible losses clearly enough. But the chief lesson of the past couple of years is that investors need to study target-date offerings carefully, not just pick any fund with the right target date. Two funds that look the same on the outside may be very different once you get under the hood.

Generally, these funds are designed to require a minimum effort from the investor. Once you put money into a fund that matches your retirement date, the fund will use a mix of stocks and bonds the managers consider suitable for someone your age. As you get older, money will be shifted from stocks to bonds to emphasize safety over growth.

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Problems arose in 2008 when investors suffered deep losses. Many apparently figured, mistakenly, that losses were not possible. But any investment holding stocks and bonds can go south.

As regulators and lawmakers began to look into the situation, it became clear there was considerable variation in fund managers’ approaches. In many cases, funds with the same target date had very different allocations of stocks and bonds. The more aggressive funds kept a bigger share of the portfolio in stocks, while the less aggressive ones favored bonds. Many funds have fairly large stock allocations even after the retirement date is reached, in order to assure enough growth for a retirement that can last 30 years or longer. That means the investor shoulders some risk of loss even after retiring.

Consider two funds with a 2010 target date. The Vanguard Target Retirement 2010 Fund (Stock Quote: VTENX) had about 51% of its assets in stocks at the end of 2009, with most of the rest in bonds. The Retirement 2010 Fund (Stock Quote: TRRAX) from T. Rowe Price (Stock Quote: TROW), had about 59% in stocks.

Before selecting a target-date fund, determine the asset allocation that best suits you. The figures can be quite different for two people of the same age, depending on each investor’s tolerance for risk, life expectancy, financial needs and other factors. Most brokerages and mutual fund companies have online asset allocation tools. Morningstar (Stock Quote: MORN), the market-research firm, has one as well.

Once you’ve settled on your own asset-allocation goal, use the Morningstar search tool to locate funds by the target-date category that suits your expected retirement date. Then study each candidate to find the ones with asset allocations that match your goal. Also look closely at each fund’s fees. If more than one fund fits your needs, the one with lower fees may well be the best bet.

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