As a general rule, you should probably avoid funds with assets of less than $50 million simply because of the relatively higher expenses associated with small funds, along with the possibility that a small fund may not survive or may undergo a change in objectives in the search for greater acceptance in the marketplace. However, you might make an exception for a small fund that is part of a larger complex - say, $500 million or more in aggregate assets - or is managed by as large advisory firm. In both cases, the management should have the resources to manage the fund's affairs with reasonable efficiency.

YAHOO! FINANCE TIP Yahoo! Finance reports a mutual fund's total net assets on its profile page. For an example, see VFINX's profile page.

On the other hand, if you are seeking an exceptional return - and are prepared to assume exceptional risk - you may wish to exclude funds with more than $1 billion of assets. This is not to say returns on larger funds will fall short of returns on smaller funds in the aggregate, for there is no evidence of this. Rather, it suggests that regression to the mean - a strong tendency for the gap between a fund with exceptional past returns and its peers to narrow - is a fact of life. Whether through asset growth or other factors, over time a fund's return tends to move toward the average.