Mutual funds where the promoters have an option to buy back the shares at the end of each business day are called open end mutual funds. Such mutual funds usually have the option for more flexibility in terms of investment. Shares in these funds are priced at net asset value. Promoters of these funds are willing to buy back the shares from the investors at the closing of every day. Comparing mutual funds is relatively easier than comparing stocks and shares. The return data over a period of time is enough to convince a customer which mutual fund to purchase.

Unit Investment Trusts or UTIs are such funds where one single value of the entire fund is created in the form of a share and then sold to different investors. These shares are issues only once, when they are created. Such trusts ideally have a definite life span, determined at the time of creation of the fund. Bond funds are mutual funds which invest exclusively in fixed income securities. They do not usually diversify from their profile. Bond funds are considered to be a very safe form of investment. Such funds which invest in stocks or equities are called stock or equity funds. The risk is slightly higher in these funds, but the returns are usually great.