Mutual funds are a collection of stocks that are managed by a financial organization. The stocks that the fund consists of changes over time to reflect the markets.
Mutual funds are a great way to easily target sectors of the market.
Small cap mutual funds refer to a fund that is made up by companies that have low market capitalization. Meaning they are smaller companies by total dollar worth.
This is the opposite of Small cap and refers to very large companies. For example Apple or Microsoft.