Target-date funds, those hot 401(k) investments, ran into trouble during the financial crisis. Many target-date funds performed poorly amid the sell-off, with the worst showing among funds designated for workers nearing retirement. Those losses have given rise to calls for changes in the funds.

After the Labor Department named target-date funds as a qualified default investment for 401(k)s in 2006, money poured in. A recent report by investment research firm Morningstar calculates the top 15 target-date families held $256.4 billion in assets at the end of 2009, almost quadruple the $69.4 billion they held in 2005.

The funds are designed to make it easy to invest. Employees just pick the fund whose date is closest to when they expect to retire, then rely on the fund's manager to gradually adjust the asset allocation to a more conservative mix as that date approaches. But in 2008, as markets melted down, the performance of target-date funds made it clear that various providers had very different ideas of what constitutes the correct asset allocation for older workers. The Morningstar report shows in late 2009, funds tagged 2010–that is, funds for workers on the verge of retiring–had equity allocations ranging from 26% to as high as 65%.