Though the below mentioned factors may not be comprehensive, they would be a good starting point from where a person can increase her/his awareness about how to pick mutual funds.

Scheme philosophy

Whenever a mutual fund scheme is launched there is a specific mandate (philosophy of investing) based on which investing is done by that mutual fund. This mandate outlines the debt-equity mix and the type of instruments that the fund would invest.

For example, the prospectus of a mutual fund will always mention the stock universe that fund invests in viz, large cap, mid cap, small cap, sector funds etc.

Fund management team

A critical component that determines performance of a mutual fund is the fund manager and her/his team. Finally it is their skills which are responsible in the decisions made regarding investing.

We have to look at both aspects -- 'Fund Manager' and 'The Team' behind her/him. If the fund manager has been around for a while, by looking at past performance we can get some idea about her/his abilities.

Even though the fund manager is the key decision maker and is finally responsible for the fund performance, her/his team too is important. To this end the process followed in short listing and selecting investment opportunities is important.