It's always easy for me to tell people, "Just invest in a mutual fund if you're too busy or not confident enough to pick individual stocks on your own." Of course, for most people, a simple index fund is all they need. But those who want to aim even higher need to find those outstanding mutual funds that have a good chance of beating the market over the long haul.

That's where things get sticky. Someone might reasonably wonder, "Well, how exactly should I go about finding such funds?" One obvious answer is to look for funds with strong long-term track records and low fees. That's relatively easy, but it's not optimal. After all, you're only looking at quantitative factors there. What if you end up with some funds where the managers are shady, or they just invest in areas or ways that don't make you comfortable?

Look for a good match
So my best advice to you is to look not only at the numbers, but also at the people. When evaluating a fund, check out the managers and how they think and invest. This isn't always easy, and if you find you can't learn much about a fund, you might consider skipping it. There are, after all, some great funds that communicate well with their shareholders.

I'm a shareholder in the OakmarkSelectFund (FUND:OAKLX), for example, which has a decent track record, though it's lagged a bit in recent years. [Its top holdings include Washington Mutual (NYSE:WM), Time Warner (NYSE:TWX), and First Data (NYSE:FDC).] I regularly receive quarterly reports from them -- the last one was 48 pages long. I also receive regular emails offering commentaries from management on how the fund is faring, along with extras such as transcripts of speeches the managers have given. It's a great way to get to know the people running a fund, and to decide whether you like them and their thinking.

Another good example
Here's one more fund that stands out in this regard. It's a mid-cap value-oriented fund that I discovered via our Champion Funds newsletter (which you can, and should, try for free here) when it was recommended last October. Its annualized average return over the past 15 years is a remarkable 15%, roughly. [Its top holdings include AltriaGroup (NYSE:MO), Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE), and Black & Decker (NYSE:BDK).] That's enough to have turned a $10,000 investment into more than $80,000.

I received a welcome-to-the-fund phone call when I invested, and have been receiving, on average, at least one mailing per month. The fund issues a monthly newsletter with guidance and commentary from the fund's main manager, and I've also received a "Methods" pamphlet containing an educational essay on diversification and the fund's take on it. When I visited the fund's website, I found a rich nook full of essays and other valuable commentary. This is a fund that's open about its style and thinking.

Here are some snippets from the latest essay:

No matter how much work we do in getting to know a company, an industry, or an economy, we will still have a 20%-30% chance of being wrong. No matter how well we get to know the people involved, there are some things they won't tell us. Often this is because they don't (or can't) know, but sometimes it is because they won't admit it. And a certain small percentage will lie to us. So we check the statistic books and find that most of this risk can be neutralized (diversified away) by owning 15-20 securities. As a result, we plan to own 20 or more securities.

Based on some knowledge of basket/security construction:

  • We avoid commodities and futures because they are a zero-sum game, and both the users and producers work to drive prices down.
  • We are very skeptical of buying options and other derivatives because they are also a zero-sum game, and time works against you.
  • We avoid limited partnerships because the fees are too high.
  • We know that CDs are guaranteed to lose you money after taxes and inflation (except for a brief period of time in the early 1980s).
  • We are skeptical of debt instruments -- bonds, mortgages, fixed annuities -- because we know they are managed for the benefit of the issuers and against the interests of the investor.

Dig for details
So as you hunt for great funds, be sure to pay attention to management and its philosophies.

We'd love to introduce you to some top-notch funds via our Champion Funds newsletter. You can try it for free, and you'll be able to access all past issues and see a long list of recommended funds. The funds are topping their corresponding market indexes by an average of about 18% to 10%.

First Data and Pfizer are both Motley Fool Inside Value selections. Time Warner is a Motley Fool Stock Advisor pick. Johnson & Johnson is a Motley Fool Income Investor recommendation.

Longtime Fool contributor Selena Maranjian 's favorite discussion boards include Book Club , The Eclectic Library, Television Banter and Card & Board Games. She owns shares of Johnson & Johnson, Pfizer, and Time Warner. For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.