Even small differences in fees can translate into large differences in returns over time. It takes only minutes to use the SEC's Mutual Fund Cost Calculator to compute how the costs of different mutual funds add up over time and eat into your returns. Know how the fund impacts your tax bill. The law requires a fund to make a capital gains distribution to shareholders if it sells a security for a profit that can't be offset by a loss. For this reason, you should call the fund to find out when it makes distributions so you won't pay more than your fair share of taxes.
Some funds post that information on their websites.
Consider the age and size of the fund. Before investing in a fund, read the prospectus to find out how long the fund has been operating and the size of the fund. Newly created or small funds sometimes have excellent short-term performance records. Because these funds may invest in only a small number of stocks, a few successful stocks can have a large impact on their performance. But as these funds grow larger and increase the number of stocks they own, each stock has less impact on performance.