Some investors try to play the stock market by hitching their star to the fastest moving mutual funds. The idea is to become a fund switcher, not merely a fund investor.

You might, for example, switch out of money market mutual funds when interest rates decline and into equity funds that specialize in stocks. When the stock market slows, you would switch back to money market funds.

Or, you might try for better performance by switching to bond funds when interest rates start to fall, then into stock funds when the stock market moves up, then into money funds when stocks decline again and interest rates rise.

An even greater refinement is to switch among equity funds, as different types of stocks exert market leadership. For example, you might ride gold stock funds until their rate of increase starts to slow, then switch to funds that specialize in blue chips or in energy stocks, if they seem to be out-performing the rest of the market.

The easiest way to switch from one fund to another is to invest with a mutual fund group. These companies offer many different types of funds, and usually let you switch just by making a phone call. Last year, more than $13.5 billion was shifted from one fund to another within family groups -- a 35 percent increase over 1980.

Dick Fabian, editor of the Telephone Switch Newsletter ($97, from P.O. Box 2538, Huntington Beach, Calif. 92647), deals only with mutual funds that let you switch by phone, and keeps his clients moving between stock funds and money funds. "We never look to bond funds," he told my associate, Virginia Wilson, "because their returns are infinitesimal when compared with equity funds. When bonds are doing well, equity funds are doing better."

Fabian thinks that a new bull market is under way and currently has his clients in the top-performing equity funds of their respective mutual fund groups. His current recommended list for telephone switches: Stein Roe Capital Opportunities, Lexington Growth, Bull & Bear Capital Shares, Value Line Special Situations, Scudder Development and the Keystone S-4 Variable Annuity Fund. He advises investors with less than $50,000 to use only one fund family, although they may invest in more than one fund in any family.

The trouble with sticking with fund families, however, is that they may not produce the top-performing mutual funds. None of Fabian's recommended funds currently appears on the list published by Lipper Analytical Services for the best performance over the past five or 10 years.

The concept of switching from money market funds into equity funds when the stock market improves is perfectly sound. But you might do better by choosing your equity fund on the basis of historical performance, without regard to whether it belongs to any group, and making your switch by mail rather than by phone.

Paul Reed, editor of the United Mutual Fund Selector ($65, 210 Newbury St., Boston, Mass. 02116) doubts that individuals can beat the market by switching from one equity fund to another. "These markets are so volatile that by the time a fund holder perceives a trend it may be getting long in the tooth," he says.

To be an expert switcher, you have to analyze each equity fund's portfolio and move to the one whose stocks are rising faster than others. In the recent market rise, for example, funds with a lot of energy stocks did poorly while those with consumer blue chips moved up well. But by the time you are ready to switch to consumer blue chips, the froth may be out of them and market leadership may have switched to another group.

Some mutual fund families advise investors which funds are better for the current market. "Many are trying to be objective," says Paul Teplitz, director of the Cambridge Research Institute, "but some may be interested in switching people into funds with higher management fees." That's something to watch out for.

The best thing for an investor to do, Reed says, is to pick a number of funds that meet your objectives and diversify your portfolio by investing some money in each. You should concentrate on buying funds compatible with your needs (for example, income funds, equity funds or tax-exempt funds), and with a good performance history.

One warning about dealing with stock and bond funds: It is sometimes cumbersome to sell shares. The mutual fund prospectus gives detailed instructions on how to sell. The withdrawal request must be signed by the same person who made the investment, and the signature must be guaranteed (get the guarantee at your bank).

If you do not follow procedures exactly, the back-and-forth correspondence with your mutual fund can consume weeks. But once the paperwork is in order, mutual funds are supposed to redeem your shares within seven business days.