Top 5 Precious Metals Mutual Funds - Best of Funds

Mutual funds investing in precious metals can be a source of comfort to investors when markets are heading south and the economy is passing through choppy weather. This is also a period when they generate higher returns on a consistent basis, even outperforming stocks. A portfolio with the presence of even a small amount of precious metals securities can provide sufficient diversification as well as protection against inflation. Precious metals funds are the brightest choice for investing in this sector since they possess the advantages of professional management and a wide portfolio.

Below we will share with you 5 top rated precious metals mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all precious metals funds, then click here.

Fidelity Select Gold (FSAGX) invests the majority of its assets in companies whose principal operations are related to gold, and in gold bullion and coins. Up to 25% of the fund's assets may be invested in gold and other precious metals through a wholly-owned subsidiary. It is non-diversified and a no load fund.

This precious metals mutual fund returned 38.55% in the last one year period.

GAMCO Gold AAA (GOLDX) seeks capital growth over the long term. At least 80% of the fund's assets are invested in domestic and foreign companies which engage in gold-related activities. A substantial portion of its assets are utilized to purchase foreign securities The precious metals fund has a three year annualized return of 7.96%.

The precious metals fund has a minimum initial investment of $1,000 and an expense ratio of 1.46% compared to a category average of 1.47%.

Midas (MIDSX) invests at least 65% of its assets are invested in companies involved in the mining, processing and distribution of precious metals. Up to 35% of its assets may be invested in companies deriving a share of its revenues from the precious metals sector. This precious metals fund returned 52.02% in the last one year period.

As of September 2010, this precious metals mutual fund held 37 issues, with 8.40% of its total assets invested in Newcrest Mining Ltd.

OCM Gold (OCMGX) seeks capital appreciation. The fund invests in domestic and foreign companies in the gold mining industry. It focuses on purchasing common stocks of gold producers. It may also invest in companies engaged in the production of other precious metals. The precious metals fund has a ten year annualized return of 27.43%.

Greg Orrell is the fund manager and has managed this precious metals mutual fund since 1988.

ProFunds Precious Metals UltraSector (PMPSX) invests at least 80% of its assets in equity securities included in the Dow Jones Precious Metals index. It also purchases financial instruments which are similar to such securities. The precious metals fund has a five year annualized return of 7.15%.

The precious metals fund has an expense ratio of 2.63% compared to a category average of 1.47%.

To view the Zacks Rank and past performance of all precious metals funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.