As it's name sounds, it is collection of funds which are mutually taking the load of your investments giving you the more diversified power to stabilize your investment engine in case of turbulence in stock market.

Use these types of products to have pros manage your money.  Typically, this comes with some price of management fees but it is worth while to pay some commission to get better results / ROI without you having spend time, doing research and also knowing products of different sectors and industries.

Mutual fund portfolio can further be designed into various categories - by size of companies, sectors, geography, and or specialty focus.

....Size of Companies - There are funds who only invests in large blue chip companies, where as other funds focuses in mid size and or small cap companies.  You can pick and choose depending on your risk apetite

...Sectors - These are the funds who specializes in particular sector like biotech, technology, energy, consumers, etc

...Geography - These type of fund investment strategies are to pick a particular country and or region e.g. India, China, Latin America, Europe, Asia, etc...

...Specialty funds - are highly unique and they pick the nice market for investment in companies like Solar, Gold miners, Telecommunication, semi-conductors, or genetics, etc...