What are the major factors to consider before choosing mutual funds?

Returns is one of the factors to look at, while selecting MF's. It is important, but the weightage is only small.

Among other important factors are risk (Standard Deviation, Sharpe Ratio, Beta), fund category, investment time period, volatility, Fund manager efficiency, No of years the fund has been in existence, etc

I also look at Rolling returns (3 years, 5 years, 10 years) and Market Capture Ratio. It is also good to look at the top 10 holdings and review them every month, as to how they are changing. Turn over ratio also matters.

I believe great returns are good, but not very important. Decent returns with acceptable risk is much more palatable to me.

I, personally, don't give lot of value to expense ratio, as long as the other factors are good. My personal belief - a good fund house hiring a great fund manager will have more cost, than the other funds (It has to pay them more, it will have higher efficiency cost). These costs will be transferred to end consumer (investors). Every company in every industry does this. An Alphonso mango is costlier than Totapuri. Both are mango's, why is one costlier than the other? You decide

Exit load is only applicable for one year from the day of investment. That need not be a big deal, unless you plan to remove your funds early, in which case you have no business investing in MF's.

Think about it.