Size matters: For safety, think big

Next take a look at each fund's average market capitalization, which measures the average size of company held by a fund. (A stock's market cap is its recent share price multiplied by its outstanding shares.) In this group, there's a considerable range of average market caps, from $2.5 billion to $12.8 billion.

Definitions vary, but firms with market caps below $1 billion or $2 billion are considered small-caps, and those with market caps above $8 billion or $10 billion are large-caps. Those in between are mid-caps.

Usually, risk-averse investors prefer large-cap stocks or funds, because the bigger companies are better able to withstand economic downturns. By contrast, because smaller firms are usually faster growers, aggressive players see better returns there. If you are averse to risk, avoid funds with average market caps below $6 billion.