This article is from the How to Start an Investment Program tutorial, author unknown.
Now a few words about mutual fund companies. As mentioned before, there are a lot of them to chose from, and most of the larger ones have all of the types of funds discussed above. Fidelity, Dreyfus, Putnam, and Vanguard (especially for index funds) are some of the best known names and have been around for many years.
Brokerage houses such as Merrill Lynch (http://www.ml.com/), Oppenheimer (http://www.oppenheimerfunds.com/), and Smith Barney (http://www.smithbarney.com/) also have a large selection of mutual funds. And companies primarily know for their insurance products such as Prudential, USAA, and John Hancock also offer a wide variety of mutual funds from which to choose.
Depending on the fund selected, you may have to pay a "load" (upfront fee) to invest, while other funds do not charge a fee (no load). On top of this, all funds charge some sort of management fee every year to pay for the cost of their accounting and marketing services. This fee is usually deducted from the amount of your total return.
As I have mentioned before, review the three year performance of a mutual fund before you invest your money. Look for one that has done AT LEAST as well as the S&P Index Funds. And secondly, monitor the fund's results. If the fund has not performed better than average after a reasonable period of time, move to another one.
If you want to learn what fund managers look for in stocks for their portfolio, stay with me. In the next section, I'll discuss how to find value in growth stocks.