Are you new to investing in equity mutual funds? Does the nomenclature of various funds - largecap, midcap, smallcap, multicap, diversified, focussed, sector, hybrid, and so on - confuse you? Well, not anymore. Here is a quick primer on various types of mutual fund schemes:

• Money market funds
• Fixed income funds
• Equity funds
• Index funds
• Specialty funds
• Fund-of-funds

Mutual fund types are organised into categories by asset class (stocks, bonds and cash) and then further categorised by style, objective or strategy. Learning how mutual funds are categorized helps an investor learn how to choose the best funds for asset allocation and diversification purposes.

Stock mutual funds:

• Large-cap stock funds
• Mid-cap stock funds
• Small-cap stock funds

Bond mutual funds:

• Growth stock funds
• Value sock funds
• Blend stock funds

Bond mutual funds may be further distinguished by the credit quality of the underlying bonds held in the particular bond fund.

Since mutual funds most commonly have a bit of risk related with them, no matter how small, it is extremely important that investors read their policy documents scrupulously before deciding to invest and do some investment fund research of your own. It would also be a good idea to read the document to ensure that they, the investors, have understood exactly what they have invested in and all the facilities that are available to them with that investment.

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