Mutual fund inflows continue to rise as investors of all ages jump back into baskets of stocks to round out and grow their portfolios for the long haul.

But with so many options available to them, some investors are finding it much more difficult to sort out exactly which funds make the most sense for them from both a cost and investment perspective, according to Madison, N.J.-based financial advisory firm Brinton Eaton.

"Careful scrutiny is now the name of the game," said Jeremy Welther, principal and senior financial advisor. "Due diligence is not just for institutional investors. When choosing a fund, individual investors need to make sure they look carefully at all the basics -- commission levels, expenses, manager style, performance and risk protection features."

Last quarter, according to S&P, American investors dumped $11.3 billion into diversified U.S. equity mutual funds and more than $14.8 billion into global sector funds. Their popularity, along with the surging interest in exchange traded funds (ETFs) and individual retirement accounts, pushed total retirement assets under management above $17.5 trillion last year, up 9.1% from 2009.

Welther said investors looking into mutual funds need to take into consideration the commission that is paid to the seller of the mutual fund they purchase as well as the gross expense ratio -- the percentage fee paid to the provider to manage the fund -- before choosing a mutual fund.

So-called no-load funds are obviously preferable, but they might not always deliver the same year-to-year performance or variety of industry stocks or bond to whet investors' whistles. On the other hand, some funds have loads of 3% to 5% or more which are tacked on either at the time the fund is purchased or when investors redeem their shares. Either way, it can take a nice chunk out of your profits.

The gross expense ratio, which includes the fund manager's compensation, administration costs and marketing and distribution fees, are usually reflected in an investor's annual return and not as a stand-alone fee. Therefore, if the expense ratio on a particular fund is a full percent, it's taken right off the top of an investor's annual profit.

These expenses are big part of the reason why ETFs have become so popular in recent years, according to S&P mutual fund analyst Todd Rosenbluth.

"You get the benefits of diversification with less cost," he said. "It could be 10s or even 100s of basis points. If you don't believe you need all 500 stocks in a particular sector or fund, you can own the best 100 or so with the same fundamental characteristics in an ETF."

Style drift, that is when a fund morphs over time to include less and less of the types of stocks that first defined the fund, can also lead investors in the wrong direction. By deviating from the original strategy, a fund can inadvertently be forcing investors to take on too little or too much risk for their particular investment profile, timeline and objectives.

"The basics of mutual fund investing haven’t changed -- balancing low costs with good performance -- but if the financial crisis of a few years ago taught us anything, it’s to more carefully scrutinize the financial products we are buying, and to consider funds that incorporate risk protection features," Welther added.

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