Target-date mutual funds — investment vehicles that automatically change your mix of assets as you near retirement — have been suffering some of the same gyrations as the stock market. But some investors are surprised to discover that these funds have performed less than they anticipated when it comes time to bid farewell to work.

The Securities and Exchange Commission wants to prevent these surprises with new rules requiring greater transparency with these investments, also known as life-cycle funds.

Many investors, the SEC found, believe these funds become more conservative as their retirement date nears. In fact, the mix of stocks, bonds and cash investments varies widely among these funds.

The funds became popular as a “set it and forget it” strategy, with little effort on the part of the investor. In fact, the selling point for life-cycle funds was that an individual investor didn’t have to worry about rebalancing the assets in his or her retirement fund — as many experts recommend. Instead the asset allocation and rebalancing are automatically done for you, as if it were a machine that roasts a chicken but you don’t have to pay attention to it until the bird is done.

Target-date funds were viewed so favorably by the Labor Department that the agency allowed them to be a default selection in 401(k) plans. At the end of last year, target-date funds managed $256 billion, compared with $160 billion at the end of 2008, according to the Investment Company Institute. Eighty-four percent of assets in life-cycle funds are held in retirement accounts.

The SEC found that funds with the same target date varied greatly in investment strategies and risks. Losses for 2010 funds ranged between 9 percent and 41 percent.

“Funds with near-term target dates incurred substantial investment losses, notwithstanding that some investors expected them to have conservative asset allocations in the years leading up to the target date,” SEC Chairman Mary L. Schapiro said in announcing the proposed new rules. “Imminent retirees invested in 2010 target-date funds saw, on average, 24 percent of their funds’ assets evaporate in 2008.”

The SEC said that life-cycle funds with the same target date had equity exposures that ranged from 25 percent in stocks to 65 percent. It could be years after the target date is reached before a particular fund’s asset mix switched to a more conservative approach.

Under the SEC’s proposed rule changes, marketing materials for a target-date fund would have to specifically disclose the asset allocation mix, and this information would have to appear with the fund’s name the first time that name is used.

So, as an example, the SEC says a target-date fund with 2020 in its name would have to include a disclosure tag line adjacent to the name, which might be worded: “40 percent equity, 50 percent fixed income, 10 percent cash in 2020.”

The proposed rule would allow an investment company to list ranges such as “40 percent to 45 percent” in a particular asset class. However, Schapiro said she’s interested in receiving feedback on whether such ranges should be permitted.

I would vote against allowing wide ranges. The more specific the companies have to be in disclosing the percentage of the asset mix, the better for investors.

Marketing materials would have to include a table, chart or graph that clearly shows how the asset mix will change during the life of the fund. Investors would also have to be provided with a statement explaining that the mix can change and disclosing when all rebalancing stops.

Most important, investment companies have to do a better job of making it clear that it’s possible to lose money investing in a target-date fund. Although if you read your investment material, you will likely already see language that says something such as “Investment returns and principal value will fluctuate, so that an investor’s shares, when sold, may be worth more or less than their original cost.” That’s the language used for the target-date funds offered in my company retirement plan.

If you want to comment on the proposed rule changes to target-date funds, you have until Aug. 23. You can post a comment at sec.gov/rules/proposed.shtml or send an e-mail to rule-comments@sec.gov. Include File Number S7-12-10 in the subject line.