But diversification by investment style can differ greatly. Some funds may be more heavily weighted for example, in large-cap growth stocks, while others might be positioned in mid-cap and small-cap sectors. There are also differences in the weightings of international positions.

"Differing asset allocation policies and expense ratios ought to lead to significant differences in performance over the long haul," Carlson says in a recent report. "We wouldn't expect sharp performance differences over shorter periods-particularly in 2007, when stocks have barely outpaced bonds. Yet a close look shows exactly that."

For example, in the 2015 to 2029 target date portfolios, Carlson says that the Franklin Templeton 2025 Retirement Fund gained 9% in 2007, while the Putnam Retirement Ready 2025 Fund gained just 1.5%. Reason: Franklin had a much larger weighting in mid-cap stocks than Putnam.

Carlson adds that more aggressive target date funds typically sport higher expense ratios. And some funds' asset allocation tactics cause them to get whipsawed over the short term. Some funds also boost exposure to asset classes that have done well in the past or cut back on stocks that have declined in value only to find such securities then moving in the opposite directions.  

Joe Nagengast, president of Target Date Analytics in Marina del Rey, Calif., says that financial advisors must examine more than a fund's expenses. They must also evaluate how rapidly the fund changes its mix of stocks, bonds and cash as it nears its target date. One fund's 2010 asset allocation mixes can help you determine what the longer target date funds will have in stocks and bonds at their target dates as well, since the longer-term funds should have the same mixes two years out, since they have the same glide path in transitioning from stocks to fixed-income investments. But there are disparities. Currently, 2010 target date funds' stock allocations range from 20% to 70%.

"You see the biggest discrepancies in short-date target funds," Nagengast says. "The funds claim they have the same purposes-to provide stability for investors. But some funds, like AllianceBernstein and T. Rowe Price, have over 60% in stocks when they are just two years away from their target dates. This could be too aggressive for many people nearing retirement."

Nagengast adds that you do not see big disparities in asset allocation mixes of longer-term target date funds in the 2030 to 2050 range. It is only when they near their target dates that the stock and bond allocations can significantly differ.

Over the long term, Nagengast believes that all target date actively managed funds will underperform their benchmarks because of fund expenses. "My criticism is couched with the understanding that most people are better off in a target-date fund [in their 401(k) or IRA]," he says. "It is a better solution than doing it on their own."

Nagengast says that nearly 90% of the assets in target date funds are held by Fidelity Investments, T. Rowe Price and Vanguard, all of which are major players in the 401(k) arena. But these fund groups take different approaches to portfolio management.

Fidelity Freedom 2020 Fund uses 25 other Fidelity Funds. At the target date, 50% of the portfolio is invested in stocks. Then stock positions are gradually reduced. The expense ratio is 76 basis points.