This article gives an example on how I select funds. 

The two index funds FSIIX and ETINX both track the MSCI EAFE index and currently have an extremely low expense ratio. Since they both track the MSCI EAFE index their performance is almost equal. Their Morningstar rating is currently four stars. Despite the fact that FSIIX has a slightly higher reported expense ratio of 0.10 instead of 0.09, FSIIX seems to have a marginally better performance.

Looking at the 10 largest holdings of FSIIX and ETINX reveals that the largest holding of ETINX is the iShares iShares MSCI EAFE Index Fund with 5.25% of its assets. Re-investing in another index fund tracking the same index seems to me inefficient. In addition re-investing in another index fund probably keeps the reported expense ratio artificially low. So ETINX might have an expense ratio that is higher than the reported value of 0.09.

The holdings of FSIIX  have a slightly smaller P/E but ETINX reports a lower P/S ratio than FSIIX. FSIIX is also a much bigger fund than ETINX, another reason why they might operate more efficiently in the long run. FSIIX currently reports 1.43 % cash while ETINX reports only 0.25% cash, which could negatively influence the returns. Very important: FSIIX currently reports a turnover of only 2% of its holdings while ETINX reports a turnover of 55%.

So FSIIX has a small disadvantage of holding slightly more cash: given the size of the fund this probably can be improved. However the disadvantages of ETINX are bigger: they re-invest in another index fund which probably artificially reduces their reported expense ratio. In addition the turnover of ETINX is much higher: the transaction costs from the extra trading will affect the long term capital gains.

Therefore if I had to choose between these funds I would buy FSIIX instead of ETINX.