#1 The conventional yardstick is the “standard performance benchmark” such as an index. I don’t use that yardstick because I want a stable reference not a floating reference. If your goal is to measure manager’s skill, then benchmark is perhaps relevant, but managers change job!
#2 My old favorite yardstick is “longest trough” in history. Here’s the definition — If I start anywhere on the NAV curve and measure how many days either to present-day or to return to starting NAV, then half the times answer is 0 since price moved up next day. For the other half, let’s record the trough length. Get the longest in history.
Picking a fund involves risk to capital i.e. “trough”. Out of the universe of thousands of funds, some have longest trough of just a few months (Perhaps the money market funds?) but 99% of funds have troughs lasting 1Y or more.
http://www.fundsupermart.com/main/research/viewHTML.tpl?articleNo=6229
#5 My other old favorite is a negative correlation with the majority of equity funds. If a fund shows good negative correlation, then it’s very rare and a great grab. I feel country-specific funds on a small country may offer that. How about a sector-specific fund?
# Another criteria is sales charge. You could exit and reenter freely.
# monthly dividend (from income not capital) would be nice. It means the components generate healthy dividend.
# minimum commitment. I like $250 funds and shun $5000 funds.