Target-date funds have gained in popularity over the past couple of years, as plan sponsors attempt to get employees to save more for retirement.

A white paper by Putnam Investments examined the target-date trend, pinpointing what plan sponsors need to understand about target-date funds before they jump into them with both feet. The research showed that target-date funds are expected to play an increasingly important role in workplace retirement plans. The survey also uncovered evidence that in evaluating target-date funds, plan sponsors tend to focus on performance and expense metrics rather than how the glide paths work.

Plan sponsors want to reduce risk to participants' retirement income, but they have not adopted a disciplined approach for adopting relevant safeguards, the study found. Plan sponsors who work with a paid financial professional tend to evolve their plans more flexibly, allowing for the incorporation of alternative investments, such as absolute return strategies, within the structure of their target-date funds or as stand-alone options in their plans. Here are six facts about target funds you need to know.