In seeking out the very best fund investments for members of my Motley Fool Champion Funds service (try us for free by clicking here), I draw on both quantitative and qualitative criteria. Among the former are such basics as the number of years a manager has been at the helm, the track record compiled during that time, and how tax efficient the fund has been on that manager's watch.

Expense ratios along with risk and volatility metrics (including the standard deviation of returns) also figure prominently as I go about the business of tallying up the quant side of the ledger. The qualitative side, though, admittedly more subjective, is every bit as important.

Here, my assessment of a fund's strategy plays a leading role. If a fund is only as strong as the manager who runs it -- and it is -- I'd argue that a manager is only as strong as his or her strategy. But which kinds of strategies make the grade? Excellent question. I'll answer it first in the negative.

Need not apply
I'm definitely not looking for stock pickers who make top-down macroeconomic calls. If a manager tells me he thinks the economy of Freedonia is due for a centuries-long expansion and has, consequently, stuffed his fund's assets into that country's thriving back-pocket comb industry, well ... let's just say his fund will never appear in the pages of Champion Funds. (Except maybe as a Dud of the Month.)

I'm likewise skeptical about managers who make dramatic moves into and out of equities on the belief that they, despite the lottery-like chances of actually pulling it off, can accurately time the market. Market timing is almost always a loser's game and, by definition, losers ain't champs.

Now hiring
So what am I looking for? Well, in part, I'm looking for managers who make their picks based on an assessment of each company's underlying fundamentals. Typically, that involves an emphasis on the balance sheet and a company's ability to generate plenty of free cash flow (FCF). A focus on successful product lines and ample market share is another key component, as is a deep-seated belief that, ultimately, it's earnings growth that drives a company's stock price.

In short, I favor managers who live by Warren Buffett's time-tested maxim: The market may be a voting machine in the short term, but in the long run, it's a weighing machine.

I'm certainly a big fan of patient penny-pinchers such as Bill Nygren, whose fabulous (though closed) Oakmark Select I (FUND:OAKLX) recently featured such low P/E holdings as Washington Mutual (NYSE:WM), toy maker Mattel (NYSE:MAT), and H&R Block (NYSE:HRB), a name that also appeared recently in Buffett's Berkshire Hathaway (NYSE:BRK.B) portfolio.

Keeping an open mind
All of that said, I'm no dyed-in-the-wool value hound. And I'm not married to a traditional kick-the-tires kind of investment process, either. John Montgomery, the force behind Houston-based money manager Bridgeway Capital and another of my favorite managers, founded Bridgeway back in 1993 after discovering he was making far more money managing his own portfolio of stocks than he was at his day job. (Cue the Beach Boys' classic "Wouldn't It Be Nice?")

In addition to being an entrepreneur, Montgomery is a brainiac. The guy holds an MBA from Harvard, and he's a former MIT research engineer to boot. As that latter line of work might lead you to suspect, Montgomery's strategy is purely quantitative, and as a result, he's not at all afraid to hold a richly valued name -- just so long as it continues to pass muster with his models. At the end of 2003, Montgomery's Bridgeway Aggressive Investors 1 (FUND:BRAGX) charge (alas, also closed) held such pricey picks as e-commerce outsourcer Digital River (NASDAQ:DRIV), digital-media concern Avid Technologies (NASDAQ:AVID), and Avaya (NYSE:AV), the Lucent (NYSE:LU) spinoff whose stock price climbed more than 400% in 2003.

One thing in common
But while my approach to assessing fund strategies is varied, there is a thread that runs through my preference for the likes of Nygren and Montgomery -- or, for that matter, any of the managers whose funds I recommend. In a word, it's discipline. Some stock pickers I like tilt toward growth, some toward value, and some, such as Third Avenue's inimitable Marty Whitman, may even snap up bonds from time to time.

All of that is absolutely fine by me. A fund investor's most important job, after all, is to assemble a solid portfolio that provides exposure to the market's various market caps, industries, and styles. So long as a manager has a sensible strategy that has produced superior results over a meaningful period, I'm more than willing to give his fund a close look -- even if it includes a smattering of equities plucked from that sizzling Freedonian economy. I hear its back-pocket comb industry is set to explode over the next century or so, anyway.

Everything Shannon Zimmerman knows about Freedonia he learned from the Marx Brothers' 1933 film Duck Soup, which he thinks you should rent right now. Shannon is the editor and analyst ofMotley Fool Champion Funds, and the lucky guy also owns shares of Oakmark Select I. The Motley Fool is investors writing for investors.