Although some people have the knowledge, resources and savvy needed to successfully play the stock market for themselves, many other people don't. For the people who lack the time or talent to manage their own portfolios, there are funds that will handle the technical work for you. In oversimplified terms, you simply place your money into your fund account and let them grow it for you.
I found an article at Investopedia which is the best short course about funds that I have ever run across. By understanding the elements that define a particular fund, better choices can be made about how to structure your fund program to accomplish your goals. The article discusses life cycle funds, fund allocations, risk assessment, investing style and fund management. You'll also find guidance about fund fees, diversity and personal investment goals.
Based on what I have learned over time about investment funds, my personal fund portfolio is structured for diversity, conservative protection, and both long and short term growth. I have 20% of my fund assets allocated to global investments, 20% in real estate securities, 20% in small cap venture funds and the remaining 40% is in fixed income holdings. Because of my asset allocation structure I may have missed out on some big gains here or there, but overall I'm pleased with my performance. My fund portfolio shows about 23% total growth over the last three years and my portfolio structure has proven to be modestly bullet proof, yielding a loss of only 0.73% through the recent credit industry foibles.
Even if you don't plan on investing in a fund for yourself, if you have a retirement plan at work, those assets are probably in investment funds and you probably have some control over the allocation of your assets. It pays to have an understanding about how funds work and how your goals affect the way you might tune your own retirement account. The article at Investopedia can be a helpful tool and it does a great job of making investment funds easy to understand.