The target date fund is really a bundle 4 or 5 different diversified funds. You can be comfortable making it your only fund. Vanguard Target date funds are good and the expense ratio should be low, but you should check. If you want to be more aggressive you can choose a later retirement date than you ordinarily would.

Well, yes - that's the point of diversification. Sometimes the small cap sector of the market will be up while the large cap sector is down, which is why you'll see small cap funds outperforming large caps. If you own two separate funds, you'd have to "average" your results to see the true picture of how your investments are doing. With a target date fund, all of those separate funds are already inside and they do the "averaging" for you (that's why target date funds are sometimes known as "funds of funds"). On paper, the overall performance of target date funds will never be as high as a pure stock fund, but it also won't dip as low when the market is down.

Because you can't really compare apples to apples with these fund choices, I would suggest that you ignore returns and focus mostly on expenses, diversification and asset allocation. The target date fund is BY FAR the best way for you to get appropriate diversification and asset allocation at a reasonable cost.