5.5. How to Pick Funds

Now that you know the basics about funds and how they work, you're ready to hunt for the funds that meet your needs. Because index funds (mutual fund or ETF) and actively managed mutual funds don't have the same characteristics, you evaluate them a little differently. Here's a summary of how to choose different types of funds.

5.5.1. Choosing an Index Fund or ETF

The big challenge in picking an index fund or ETF is the number of choices. Depending on the index you're looking at, you may have hundreds of index funds or ETFs to choose from. As with actively managed mutual funds, take a look at the fund's prospectus, which you can find on the fund sponsor's website.