Albert Einstein once said, “Everything should be made as simple as possible, but no simpler.”

When it comes to investing, I have always believed that the simplest approach is the best approach. But, in recent years, a new type of investment has, I believe, crossed over into the “too simple” category.

This new type of investment: target-date mutual funds. If you are not familiar with them, target-date funds are mutual funds that are themselves made up of a group of other funds. For example, a target-date fund might be comprised of a stock fund and a bond fund, with the specific mix geared to one’s expected retirement date (the target date). For workers early in their career, the mix might be 90% stocks/10% bonds. But, over time, as the worker gets closer to retirement, the composition will shift, automatically becoming more conservative. Owing to their simplicity, target-date funds have seen dramatic growth over the past ten years.

In theory, this type of all-in-one offering is very appealing, but there are several reasons why I would be cautious about investing in one:

First, target-date funds make it difficult to know what you own.

Research has shown that the most important driver of a portfolio’s risk and return behavior is asset allocation — that is, your mix of stocks, bonds and other assets. As a result, asset allocation is the portfolio metric that is arguably the most important to monitor. But, target-date funds make it difficult to track this key metric because they contain a mix of asset classes — and, worse yet, a mix that is constantly changing.

Second, the composition of these funds may be a poor fit.

Choosing an investment based on your age is like choosing clothing based on your age. It might be okay when you’re an infant or a toddler, but it makes little sense as you get older. Yes, there is some correlation between your age and your investment needs, but your age is just one piece of the puzzle. Other factors include: the size and composition of your other assets, your eligibility for Social Security or a pension, your spouse’s retirement timetable, whether you expect an inheritance, and much more.

Third, it complicates tax planning at every stage of your career.

Target-date funds complicate tax planning during your working years due to a concept known as “asset location” — that is, the type of account in which you purchase each asset. For example, suppose you have a 401(k) and a taxable account and you want to purchase $1,000 of stocks and $1,000 of bonds. Should you put the stocks in your 401(k) and the bonds in your taxable account, or the other way around? Even though you would be purchasing the same investments in each case, this decision would impact your tax bill. For that reason, asset location is a valuable tax planning strategy, but by creating an inseparable link between stocks and bonds, target-date funds hamper your ability to employ it.

Target-date funds complicate tax planning as you get older. That is because they assume that you will want to sell stocks and buy bonds as you get closer to retirement. For many people, this will make sense, but suppose you don’t want to do that. Maybe your portfolio is large enough that you can afford more risk. Or maybe you have a pension or other secure source of retirement income. In all of these cases, the target-date fund will be working against you, selling assets and generating taxes, when you wouldn’t have otherwise.

Target-date funds might also work against you once you enter retirement. Suppose, for example, that you want to withdraw $50,000 to meet your expenses this year. To minimize the tax impact, you would want to sell investments that have the smallest unrealized gains, and perhaps simultaneously donate to charity investments with the greatest unrealized gains. For most people, this might mean selling bonds and donating stocks. This is a powerful strategy, but when you own a target-date fund, your ability to do this is limited because of that inseparable link between stocks and bonds.

Finally, target-date funds often carry higher fees.

In many cases, target-date funds are no more expensive than their component parts. That is as it should be. But, I have seen several cases in which target-date funds were considerably more expensive than their constituent parts. Like paying $3 to buy two $1 bills, this sounds illogical, and I would even call it unfair, but it happens.

Fortunately, there is a solution: If you are considering a target-date fund, instead simply purchase the constituent funds independently. While this will require a little more effort, I believe it will be well worth it.