Expenses and consistency of style are the most critical aspects of mutual funds, according to CNN Money. Because any fees required by a fund effectively reduce the return that an investment in that fund realizes, low fee levels are preferable for the average investor. Selecting a fund with a manager that employs a consistent investment strategy ensures that the fund continues to play the same role in a long-term investment portfolio.
Risk, past performance, tax burden and asset bloat all affect mutual funds, notes CNN Money. A fund's long-term past performance and its immediate performance both require evaluation. Comparing a fund's performance against the category average offers perspective. Minimizing the tax burden on investments is key because if and when a fund is sold for a profit, capital gains taxes are due on that value.
The most important steps in selecting a mutual fund are identifying an investment goal and determining risk tolerance, according to Investopedia. Investments meant for retirement differ from investments meant for immediate cash payouts. An investment portfolio that can dramatically increase and decrease in value is only appropriate for risk-tolerant investors who are not seeking a stable source of long-term income from a single mutual fund.