Question: 
Where can I get comparative information on mutual funds? What comparisons are the most important?

Answer:
You can get information from magazine and newspaper articles. Especially useful are the annual and semiannual mutual fund issues put out by financial magazines such as Money, Forbes, Kiplinger's Personal Finance, Smart Money and Business Week. Each publication has its own way to evaluate funds, usually combining data on risks and returns.

The magazines' recommendations are based heavily on recent performance, which is one of the less valuable predictors of future performance. But the special-edition articles typically contain good factual data on returns and relative performance during up and down markets. You'll also find data on minimum investments, loads and other expenses and (usually) the toll-free telephone numbers to call for more information.

These articles are a good way to get ideas and see various categories of funds listed together. For instance, you may find a list of numerous short-term bond funds in one place and aggressive-growth stock funds in a separate list.

You'll get much more detailed information on individual funds from Morningstar, a large Chicago firm that rates mutual funds. You'll find them at www.Morningstar.net, a good Web site. To look for a fund, type in its ticker symbol or name, and you'll find several pages of basic information. Some of the online fund reports include what Morningstar calls "Inside Scoop," a very brief description and commentary on the fund.

Before you invest in a fund, you might want to take your research one step further and get a one-page report from Morningstar, either online (for a small downloading fee) or at a library, where you can look up funds in Morningstar's guidebook, which is updated weekly. This report will give you more detailed data on many funds, along with a more thorough commentary.

If you're a typical investor, you'll focus first on performance comparisons. Obviously, you'll want to find funds that deliver for their shareholders. But beware of the trap of choosing a bunch of funds because of their high recent performance. The chances are they all invest in the same kinds of stocks; when that type of stock turns sour, all these funds may be hurting at the same time. That's not what you want in a portfolio.

Savvy investors look for more than just big positive performance numbers. They look for low expenses (and of course no loads), stable managers and consistent strategies for actively managed funds.

You should expect index funds to have lower expenses than actively managed ones, and index funds should faithfully follow the asset class they follow. And of course the most important decision you'll make in choosing a fund is the asset class.

Performance during down markets is especially valuable, because making money is only half the equation for successful investing. The other half is keeping that money, and not losing it.

Remember that comparing performance of load funds and no-load funds is tricky. Unless a performance figure is identified as "load-adjusted," it usually ignores the load an investor paid. So if you see two funds with nearly identical returns, but one is load and the other no-load, the no-load fund actually returned much more to the investor.

For example, assume you invested $10,000 in a no-load fund with a three-year compound rate of return of 15 percent. After three years, your $10,000 would grow to be worth about $15,208. Now assume you invested $10,000 in a fund with identical performance, the only difference being that you paid a load of 4.5 percent. The funds' returns might have been the same, but the no-load fund had only $9,550 of your money to invest, and in three years it grew to $14,524. The stated performance was the same, but the no-load left you with $684 more after three years.

Finally, our Web site has a unique fund comparison feature, Explode Loads!, with which you can find a no-load alternative to any of the 100 largest load funds. For example, if you're considering investing in Fidelity Destiny II (fdetx) but don't want to pay its 8.67 percent load, Explode Loads! will suggest you consider the similar but no-load Vanguard Morgan Growth (vmrgx). Destiny has an expense ratio of 0.48 percent and was up 12.2 percent in 1999 through November 15. Vanguard Morgan has an expense ratio of 0.44 percent and was up 21.23 percent through November 15.