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There are many ways to select a mutual fund, each one has its own ups, downs, and risks. As you select your first mutual fund, consider these factors:

The fund manager: Often a fund is only as good as its management. If the fund manager has shown great performance in the past, future performance is likely to be above average. If the fund manager has been replaced, past performance becomes less meaningful and may even be worthless. A poor-performing fund that gets a new fund manager may turn around and become a top performer.

The objectives of the fund: Some funds focus on specialty or sector funds (gold funds or biotech funds) and often offer great returns. However, they arent good funds for the online investor who wants to own just one mutual fund. If you own just one specialty fund, you lose the advantage of diversification.

The size of the fund: Good fund candidates have at least $75 million under management and should be large enough to keep up with institutional investors. At the opposite end of the spectrum, funds with more than $40 billion tend to have problems with being too large.

The stability of the funds philosophy: If the fund seems unclear about its financial goals and is switching investment methods, it may be in trouble. The financial goals of the fund is highly important, unstable goals can be a bad sign but also in a poor performing fund that just replaced the fund manager can be a good sign.

Fees: A debate has raged during the last ten years about which is better: no-load or load mutual funds. All the studies indicate that paying a sales commission doesn’t ensure a greater return. However, investing in a fund with high fees and high returns is better than in a fund with low fees and poor performance. Fees are part of life, investing is no different; fees can also overwhelm you so make sure you understand the fees before you commit.