Mutual Fund investments nowadays are the most preferred investment option. Mutual Fund companies in Saudi financial market are the top profitable companies. Investors usually prefer banking financial institutions while investing their savings, since they feel banking financial institutions are more secure and risk-free than their counterpart nonbanking financial institutions. The purpose of this research is to change the customer preferences towards banking and nonbanking institutions which are offering mutual funds in Saudi financial market. The aim of this study is to compare the performance of Saudi equity mutual funds in banking and nonbanking companies listed on Tadawul stock exchange. The sample companies were chosen for this study consist of four banks and four nonbanking finance companies which are listed as mutual fund companies in Tadawul stock exchange. Standard Deviation, Beta and Sharpe performance measure has been applied in order to measure the performance of Saudi Equity Mutual fund finally one way ANOVA statistical tool is applied to compare the performance of banking and nonbanking companies.