Mutual funds are diversified by nature. In purchasing a mutual fund, an investor is buying professional money management services to purchase diversified investments based on the mutual fund's defined objectives as detailed in the prospectus. Furthermore, a mutual fund is legally required to buy back its shares at any time for their Net Asset Value (NAV = Current Portfolio Market Value – Liabilities ÷ the Number of Outstanding Shares) versus the public offering price, which is the price at which a new securities offering is made available to the public (POP = NAV + the load, if any).

As with the Net Asset Value, the public offering price will typically change on a day to day basis, being calculated at the end of each business day. Buying back shares at NAV is a liquidity feature of mutual funds, allowing cash to be quickly available for investors. In addition, investors in mutual funds have the flexibility of using the exchange privilege to respond to changes in their own investment objectives or even market conditions. Most mutual fund companies offer a "family of funds" between which the investor can generally transfer shares without paying new charges.