1) Selecting good mutual funds is extremely difficult as only 20% may outperform their benchmark over the long run and 40% of funds from 10 years ago are no longer in existence.
2) Both qualitative and quantitative factors must be analyzed to select funds, including the people and process behind the fund, fees, performance metrics, and consistency with the stated investment philosophy.
3) Most active funds underperform their benchmarks, so investors must decide whether to pursue an active or passive strategy based on their goals, beliefs about market efficiency, and ability to identify skilled managers. Choosing funds requires extensive research and analytical skills.