Stock funds are usually categorized based on the size of the companies they invest in. This doesn't mean the size of the company exactly, but rather the stock market value. This is determined by multiplying the number of outstanding shares by the share price. This is called market capitalization, or cap size.

• Small-cap funds typically invest in companies that have a market value less than $1 billion. Small-cap funds can provide high investment returns but are also considered to be a little risky.

• Mid-cap funds are usually made up of companies valued in the $1 billion to $8 billion range. They'll have some in the lower end that are likely to have higher growth but at the same time add some risk.

• Large-cap funds invest in companies with market values that are more than $8 billion. Large caps often follow the index funds and invest in all of the companies. Large-cap funds are less risky but typically produce lower returns.