funds of funds
fund costs

Mutual Funds incur several levels of cost, not all of which are visible to the customer of the fund, some of them are not even measurable. But all of them have a very direct impact on the return you are going to get over the next umpteen years:

Visible costs, the ones that are actually shown on the prospectus or fact-sheet of a fund.

Management fees: which have been increasing steadily, in spit of the ever-bigger assets under management. By far the biggest junk taken out of your money, presumably to buy you all the knowledge and wisdom the fund manager and his team can muster in order to make (you) as much money as possible. As your average actively managed fund cannot beat the market it should be paramount to keep these cost as low as possible. Passive funds fit the bill as close as possible. For those investors with a serious need to add management cost, why not consider using a fund of funds, as these add anther extra layer of cost on top of the ones descried here.
Front and back loads: depending on the broker you are using and/or on the fund provider you have to pay a certain amount, usually a percentage of the amount traded, for the privilege to buy (frontload) or sell (backload) of the fund shares. (ETF's do of course not incur these loads, but brokerage fees will make up for it just nicely). If you are a buy and hold investor the loads become less of an issue over the years, but they should not be ignored when making decisions regarding which fund to buy.

Hidden costs, incurred when doing business in the markets, the more you trade, the more often you come across them, definitely worth knowing about, especially as there is a way to reduce them:

Spread: the difference between bid and ask when buying / selling a stock. The more your fund trades its holdings, the more often you pay the difference. Passive instruments do by definition trade less often then actively managed funds.
Cash drag: in order to pay out fund owners should they wish to sell their shares, most funds carry a certain amount of cash in their portfolio. These moneys do not participate in any gains stocks occur, dragging the performance. Once again passive instrument are the smart choice.
Market impact costs: especially for very big funds, and these specializing in very illiquid stocks. Their buying or selling of certain stock causes the stock price to move. I.e. when a fund owns lots of stocks of a very small company and it decides to sell them the sell order itself will drive the price of the stock down, lowering the return of the fund. The more you trade, the more often you get this problem, again...

In Europe a new term is gaining hold, the Total Expense Ratio (TER) covering all cost you are going to have to carry should you own the respective fund.