Mutual fund investors are on a perpetual search for the “magic formula” to select consistent winners in the mutual fund world. Although there are plenty of advisers who attempt to time the market or chase performance, most investors are not well served by such strategies.

The key to successful mutual fund investing is selecting quality funds that may give up some ground during market downturns, but have the staying power to keep investors solvent through the inevitable hard times.

A mutual fund is only as good as its management team, so it’s important to gauge the team’s investment acumen. The warning “past performance doesn’t guarantee future results” appears in every mutual fund prospectus. Nevertheless, management’s track record is the most obvious starting point. If a fund’s management team has successfully navigated a full market cycle and still managed to stay near the top of its peer group, then the fund is more likely to achieve that performance again in the future.

That’s why you should always look at performance data that cover several durations, ranging from three months to five years, with the three-year return as the key metric. Shorter durations can make market swings appear to be management missteps, but it does take time for managers to reposition their portfolios based on market conditions, particularly if they run a large fund. We suggest that you consider investing only in funds where the lead manager has been at the helm for at least three years. However we make an exception when management has established a successful track record with a similar fund.

The second major consideration in selecting a mutual fund is expenses. Numerous academic studies have shown the detrimental impact of high fees. If mangers and fund sponsors take a hefty cut off the top of a fund’s assets, it is inevitably going to cut into your bottom line. That’s why we focus on no-load mutual funds.

But even funds that don’t charge sales fees can be pricey if their expense ratios include high management fees, administrative expenses or 12b-1 marketing fees.

Examining a fund’s stated annual expense ratio is just a starting point in gauging costs. Before you invest in any mutual fund, you should always review its annual reports from the past few years to learn if fees and expenses are growing, shrinking or holding steady. If a fund is successful at attracting new investors, expenses should decline due to economies of scale. If they’re not, that’s a red flag that management’s interests may not be aligned with those of its shareholders.

Finally, you need to understand the amount of risk entailed by a fund manager’s strategy.

One of our favorite metrics is the Sharpe ratio, which measures how well an investor is compensated for the risk of a fund manager’s strategy. The Sharpe ratio isolates the additional return a fund produces above and beyond a risk-free asset, such as T-bills, and then compares that figure to the overall volatility of a fund’s returns as measured by standard deviation. When comparing funds with similar total returns, the fund with the higher Sharp ratio is doing a better job of compensating its investors for enduring the volatility of its portfolio.

Standard deviation, which is one of the components of the Sharpe ratio, is also a solid measure of risk on its own. Standard deviation gives investors an indication of the full range of returns they can expect a fund to produce most of the time. If standard deviation is high, returns tend to be volatile and the fund may not be suitable for more conservative investors.

The final risk metric worth checking regularly is beta, a measure of the volatility and correlation of a fund’s returns relative to its benchmark. A beta of 1 indicates that the fund produced returns with the same level of volatility as its benchmark. A beta higher than 1 indicates that a fund is more volatile than its benchmark, while a negative beta means that a fund is inversely correlated to its benchmark. In the latter case, if the value of the benchmark falls, the value of the fund rise.

When you’re researching a group of potential investment candidates, use these metrics to select the fund that produces the highest total returns with the least amount of risk.