New Delhi, Aug. 18 -- Starting a mutual fund investment can feel a little like walking into a supermarket without a shopping list. There are plenty of options, unfamiliar labels and no obvious answer to which one belongs in the basket.

The choices become easier to understand once you recognise that different funds are built for different purposes. Some invest primarily in shares, some in debt instruments, while others spread money across asset classes.

A mutual fund pools money from several investors and invests it according to a defined investment objective. Depending on the scheme, that money may go into shares, bonds or a combination of asset classes. The portfolio is managed by an Asset Management Company (AMC) in accordance with th...