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Not sure I can add much to the good comments so far, but here goes...

1.  I think it's much more difficult to pick a mutual fund than to pick a stock. There aren't fundamentals to review, all you really have is the fund track record - which may or may not have been with same management team - and ratings by firms like Morningstar and Lipper. 

2.  Active vs passive.  Passive, index tracking mutual funds tend to have much lower expense ratios than actively managed funds - largely because there's no stock picking research.  However, the comparison isn't always apples to apples since a fund might have slightly different objectives than its benchmark index.  For example, a fund might have a defensive, conservative investing profile - in an up market, it would underperform broad market indices, but should outperform in a bear.  An investor who wants lower volatility might be better with a convervative, active fund than with an index fund.   I suspect most fund managers would beat an index IF the expense ratios were the same, but throw in a 1-2% cost headwind, and beating the index over a long period gets very difficult.

3.  Target funds.  I've read that these are generally not a great choice.  First, the mix is generic and can't take your individual situation and other assets into account.  Then, some of them end up layering fees on fees - they're usually made up of other mutual funds so you get the target fund fee plus the fees from the underlying funds.

4.  After looking at the Morningstar info on a fund, the next thing to check is the expense ratio.  Even a difference of a few tenths of a percent is significant over a long period of time.  If you're leaning toward a higher fee fund, ask yourself - what about this fund makes it worth paying a higher management fee?

5.  Check the research material at your regular brokerage firm.  They may have reports or evaluations of the funds that aren't readily available in other places.

6.  Good luck. 

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