Target retirement mutual funds are rapidly gaining popularity because of their convenience, but they may not be the set-it-and-forget-it option that investors think, according to a report from MarketWatch.

Some fund complexes are willing to take greater risks than others, for example, and some target retirement portfolios spread the money too thinly and risk diluted returns.

"They take care of the funds to invest in," explained Jim Peterson, a vice president at the Schwab Center for Investment Research. "But are you going to have enough money."

That's because, as MarketWatch points out, not all target retirement funds are created equally. Some take more stock market risks, which can improve returns, while others are more conservative, which can lower returns.

The Fidelity Freedom 2025 Fund, for instance, has allocated 62% of its assets to U.S. stocks and 11% to non-U.S. stocks. The T. Rowe Price Retirement 2025 Fund has 85% of its assets in stocks. By contrast, the Vanguard 2025 Retirement Fund has 58% of its assets in stocks and the remainder in bonds.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.