A unit in a mutual fund is a security that gives small investors access to a diversified portfolio of equities, bonds, and other securities, without need to invest great sums of money. A holder of a fund partnership unit participates in the gains or losses of the fund. Open-end fund units are issued and can be redeemed as needed. A closed-end fund issues a fixed number of units.

The price of open-end fund units is calculated based on the fund's net asset value (NAV), which is determined each day. Each mutual fund portfolio is invested to match the objective stated in its prospectus.

In comparison to direct investment on the stock market, investment in mutual funds minimizes risk for private investors.