Last Modified: Saturday, March 12, 2011 at 9:16 p.m.

BOSTON | Target-date mutual funds are changing, yet trying to stay true to their aim.

Theyre designed to help investors achieve long-term savings goals while leaving portfolio adjustments to the pros. As investors approach a target retirement date and have less appetite for risk, the mix of investments in the fund becomes more conservative. Fewer stocks and more bonds reduce the chances that an ill-timed market decline will cut deeply into savings just before or during retirement.

That set-it-and-forget-it appeal is big with hands-off investors. And these funds are often the default option for 401(k) enrollees who dont specify how to invest money set aside from their paychecks. Workplace retirement plans account for roughly two-thirds of the $340 billion in target-date funds, also known as lifecycle funds. Just 15 years old, the funds are growing rapidly, attracting a net $47 billion last year, according to Morningstar.

Yet it hasnt been all sunshine lately. Target-date funds werent immune from the 39 percent drop in the stock market in 2008. The industry had to defend its practices after steep fund losses left many investors scaling back or delaying retirement plans. One fund designed for investors planning to retire in 2010 lost 41 percent of its value.

Now, two years after the market sank to a low in March 2009, most funds are getting back on target. Credit a bull market that shows little sign of letting up, and has helped quiet talk in Washington of sweeping changes to target-date fund rules.

Still, even the most disinterested investors should take a close look before choosing a target-date fund. Its a commitment thats designed to last for decades.

Doing homework is critical because the financial meltdown exposed vast differences among funds with the same target retirement year in mind. Those differences are becoming more pronounced as several fund companies reshape their target-date lineups. Understand what youre investing in, and examine disclosures such as prospectuses for details of any changes to fund operations.

Many of these funds are no longer limited to a mix of stocks and bonds. So even though the target-date name hasnt changed, the product has, says Lynette DeWitt, a research director with Financial Research Corp. Similar to what you buy on a grocery shelf, new and improved fund products are being created, yet without a label that will tell you what changed.

Here are four target-date trends worth watching:

Performance rebound: The stock slide was so steep that most mutual funds havent fully recovered: The Standard & Poors 500 index fell 57 percent from the markets October 2007 peak before hitting bottom. Even so, the buffer that their bond holdings provided served them well.

Funds with target dates ranging from 2000 through 2010 the most conservative ones, with a majority of their portfolios in bonds returned an average 2.1 percent from October 2007 through Monday, according to Morningstar. A $10,000 investment at the markets peak is now $10,209.

The most stock-oriented funds, with target years of 2050 and beyond, have lost an average 9.2 percent. Their investors are 20-somethings, young enough to absorb short-term hits when stocks tank.

Among individual funds, performance has varied widely since the markets peak. The top 2010 target-date fund, MFS Lifetime 2010 (MFSAX), has gained 17 percent, in part because it held less than one-third of its portfolio in stocks at the start of the bear market. The bottom 2010 fund? Oppenheimer Transition 2010 (OTTAX), the one that lost 41 percent in 2008 is down 21 percent overall since October 2007.

Investment strategy shifts: Many target-date funds aim to reduce volatility by trimming the percentage of stock held for near-retirees. For example, Oppenheimers 2010 fund has cut its stock component to 45 percent, down from 56 percent.

For those far from retirement, the trend sometimes runs the opposite direction. Oppenheimers funds geared toward younger investors have more stocks than before Oppenheimer 2050 climbed to 94 percent from 90 percent. The hope is that stocks greater potential for long-term gains will serve investors better than a more bond-oriented approach.

Expanding mix of assets: Since 2008, more target-date funds are looking beyond bonds to protect portfolios from volatility. Many are adding small stakes in alternative investments: commodities, real estate investment trusts, precious metals like gold, and inflation-protected bonds called Treasury Inflation-Protected Securities, known as TIPS. These alternatives may rise in value when stocks fall, or vice versa. Some also provide protection when inflation kicks in.

DeWitt says these diversifiers may build more safety into target-date funds. But markets are unpredictable, and DeWitt says alternative assets might sometimes introduce more volatility than a traditional stock-bond mix.

Widely varying fees: Some target-date fund investors may pay as much as nine times more in fees than others. At the high end, the difference can become huge over an investing lifetime, because fees cut into returns year after year.

Investors in Vanguards target-date funds on average pay 0.18 percent per year on the amount theyve invested, according to Morningstar. Vanguards two largest target-date rivals, Fidelity and T. Rowe Price, charge 0.74 percent and 0.78 percent, respectively. Oppenheimers target-date lineup charges the most, with an average 1.68 percent.

A key reason for the wide variation: Vanguards target-date funds invest in the companys low-cost index funds, which seek to match market performance rather than beat it.

Other companies rely more on active management, where you pay extra for the expertise of professionals who picks stocks or bonds, hoping to beat the market. Overall, target-date fees are declining. Morningstar analyst Josh Charlson offers some advice: Its become very competitive in the marketplace in terms of cost. So take advantage of it.