2. How big a return do you seek and how much risk you can you stomach?
If you are risk averse, consider a fund that is weighted more heavily toward U.S. government or high-grade corporate bonds. Know that these are not entirely risk-free, particularly in a rising interest rate environment. If you're looking to maximize your returns and can handle the elevated risk of trying to achieve high returns, consider a fund more weighted to stocks, including small-cap and foreign equities.
3. Do you want a fund with static allocations or one that shifts according to market trends?
"We like passively managed funds," says David Cowles, director of investments for financial advisers Mosaic Financial Partners in San Francisco. "For example, if a fund decides to sell international stocks for 12 months, that's market timing, which we don't like."
But others feel differently. "The ability of the team to shift its portfolio weightings based on the economic environment is positive for investors," says Michael Sheldon, chief market strategist for RDM Financial Group in Westport, Connecticut.
In either case, of course, you want to research the fund manager thoroughly -- from his or her track record for returns to his/her investment philosophy.
"There's a little more risk on making the right call for the active managers," Carlson says. "So you want to understand the asset allocation process and how that fits into what you're doing."
4. How broad a range of assets do you want your fund to include?
Many advisers say the broader, the better. "The benefit of a multi-asset fund is that you get diversification in one fund as opposed to having to make multiple securities choices," Sheldon says.
5. How much are you willing to pay in fees?
For funds that are oriented toward domestic stocks and bonds, advisers say you should be able to find a strong performer with fees totaling about 1 percent or less.