If you're exposed to the financial media with any regularity, you've probably heard of so-called targeted, or "lifecycle," funds. At these funds, management specifies the asset allocation, keeping the fund's monies invested in a selection of underlying component funds.

Unlike the typical balanced fund, however, the asset allocation at targeted funds is fluid, with management gradually moving monies out of stocks and into bonds and cash as the "targeted" retirement date associated with the fund approaches. As such, these funds can be an acceptable fit for investors who don't like to spend a lot of time on portfolio rebalancing and maintenance.

Fund companies have rolled out these retirement-oriented funds of funds by the truckload in recent years. Fidelity's Freedom Fund lineup, for example, includes 10 funds geared towards those retiring, or who have retired, in the years spanning 1998 to 2042. T. Rowe Price, too, offers an extensive selection of targeted funds in its Retirement lineup. And for index fund fans, Vanguard's Target Retirement offerings group a handful of Vanguard index funds together to make each portfolio. Target Retirement 2025, for example, currently parks 88% of its holdings in Vanguard Total Stock Market (FUND:VTSMX) and Vanguard Total Bond Market, complementing that exposure with smaller slices of the shop's European Stock Index and Pacific Stock Index funds.

Interestingly, these three shops differ widely in their asset allocation attitudes, even across funds geared towards the same retirees: At last check, T. Rowe Price Retirement 2025 devoted a hefty 85% of its portfolio to stocks, Fidelity Freedom 2025 had a 75% equity stake, and Vanguard Target Retirement 2025 held a somewhat stodgy 59% in stocks. Given such disparities, if you're in the market for a targeted fund, make sure you're comfortable with the firm's specific approach to asset allocation before you jump in.

It's also important to keep in mind that most targeted funds don't cover all the bases. As a group, they tend to stick to large- and mid-cap stocks, holding blue chips such as ExxonMobil (NYSE:XOM), General Electric (NYSE:GE), Microsoft (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE), and Wal-Mart (NYSE:WMT), and offer little exposure to the small-cap stocks that have done so well for investors in recent years.

Indeed, for a more well-rounded portfolio, you might check out the Fool's Champion Funds newsletter service, which just unveiled a basket of funds designed with aggressive investors in mind. (Portfolios for moderate and conservative types will make their debuts soon.)

At any rate, you should certainly look before you take the lifecycle leap. To be sure, if you're a beginning investor, or don't have the time or patience to invest on your own, these funds can offer inexpensive, no-fuss, diversification -- provided you choose the one that best suits your investing timeline and tolerance for risk.

Fool contributor Josie Raney hasn't once hit that inner circle on the dartboard. She doesn't own any of the funds mentioned above.