The Securities and Exchange Commission proposed new rules today that would require target date funds to significantly improved disclosures on their marketing materials, in an attempt to help investors better understand these increasingly important investment vehicles.

The proposed rules, which are now subject to a 60-day public commentary period, were posted on the SEC’s Web site this morning.

“These proposed rule changes would help clarify the meaning of the date in a target date fund and improve the information provided when these funds are advertised and marketed to investors,” said SEC Chairman Mary L. Schapiro, in a statement. “Together these rule amendments are designed to foster investor understanding of target date funds and reduce the possibility that investors will be confused or misled.”

Target-date funds are marketed as single-solution asset allocation investment products. Investors are encouraged to select a fund whose target date matches up with the time when they will need the money. For instance, an investor who is retiring in 2030 might select a “2030” target-date fund. The fund will hold a mix of stocks, bonds and potentially other securities, and then gradually reduce the risk of that portfolio as the target date approaches. It’s a “set-it-and-forget-it” approach to investing.

Target-date funds came under pressure in 2008 when many supposedly conservative funds posted shockingly large declines. Returns also varied widely between competing funds. As the SEC points out in its release, funds with a stated target date of 2010 posted returns ranging from -9 percent to -41 percent in 2008. You can forgive investors if they were surprised that these supposedly “set-it-and-forget-it” funds offered such wide-ranging performance difference.

Under the new rules, funds will have to disclose their current asset allocations in all marketing materials, detailing the split between stocks, bonds and cash for all to see. In addition, marketing materials would have to show how those allocations would change over time. That information has always been available in fund prospectuses, but the idea is to bring it to investors’ attention at a top-line level to show how risky or not risky a particular family of target-date funds are.

The need for these disclosures point to the lack of consensus in the index and fund industries on how to properly structure a target-date fund. There is no dominant target-date index or consensus asset allocation policy, and different target-date funds differ widely. There has been a tendency for funds to take increasingly aggressive positions in an attempt to outperform their peers during rising markets, as that makes the funds more marketable. Unfortunately, that aggression comes with a downside, as many investors learned in 2008.

There are currently 13 target-date ETFs with a combined $202 million in assets.

There are $275 billion in target-date funds more broadly.