If you don't know where to start, the preset screens point you in several promising directions. What's more, you can tailor Fund Selector to your needs, focusing on what's important to you. Here are the five Fund Selector criteria that I consider essential, in order of their significance. They form a simple, sensible approach to investing that helps me meet my goals. To start searching, I need some idea of the type of fund I'm looking for.
Morningstar categories offer a quick and accurate response to that question.
They show how funds have invested their assets in the past, based on their actual holdings. Funds in the large-value category, for example, favor big U.S. companies that appear to have cheap stock prices relative to other large stocks. I need this information for two reasons. First, it allows me to keep my portfolio spread among different types of securities, so that I don't rely too much on one area of the market. In other words, I want to enjoy the benefits of diversification .