When you look at top-performing mutual funds for the past five years, you can count on many of them being funds that invest either in emerging markets like Latin America or in natural resources stocks. Yet while you'll find dozens of funds that invest in the natural resources sector, not all funds are alike.

With that in mind, let's take a look at two representative natural-resources funds that have strong, consistent performance records. From looking at their similarities and differences, you can get some clues about how to find the truly superior funds in a given category.

Two bites at the apple
Fidelity Select Natural Resources (FNARX) invests in securities of companies that own or develop natural resources or supply goods and services to such companies, and in precious metals. Top holdings include Schlumberger (NYSE: SLB), National Oilwell (NYSE: NOV), and Valero Energy (NYSE: VLO). As these stocks suggest, the fund has an overall 80% exposure to the energy sector.

Performance has been consistently good, with a five-year annual average return of more than 31%, and a 10-year average close to 16%.

Van Eck Global Hard Assets (GHAAX), on the other hand, invests in a wider variety of commodities stocks, including both energy and various industrial and precious metals. Top holdings include Devon Energy (NYSE: DVN), Range Resources (NYSE: RRC), and Occidental Petroleum (NYSE: OXY). Energy companies make up the bulk of the fund's assets at 63%, with industrial and precious metals making up about a quarter of the portfolio.

Performance has been steady and strong, with a 36% annual return over the past five years, and a 10-year average of just under 14%.

Fund facts

Fund

Investment Minimum

Inception Date

Expense Ratio

Net Assets

Van Eck Global Hard Assets

$1,000

Nov. 1994

1.50%

$1.03 billion

Fidelity Select Natural Resources

$2,500

March 1997

0.92%

$2.3 billion

Prospects and risks
Like any other sector-specific fund, these natural resources funds are nondiversified and can therefore be particularly vulnerable to adverse events affecting the sector, such as international political and economic developments, energy conservation measures, commodity price drops, taxes, and government regulations.

Now, natural resources are in short supply as demand has exploded from developing nations. Predictions are for more of the same in the foreseeable future. Because commodities markets are notoriously volatile, expect to see wide fluctuations in the prices of either of these funds.

After such strong performance, you have to ask yourself whether you've already missed the best performance for the natural resources sector. Given the strong fundamentals in the sector, however, that's a tough question to answer.

Portfolio fit?
If you want natural resources exposure, either of these two funds would be attractive. Both funds have some similarities. Both, for instance, have high turnover rates -- Van Eck comes in at 89%, while Fidelity is at a whopping 116%, according to Morningstar. Turnover is important for taxable accounts in that funds with high turnover tend to distribute larger capital gains, creating more tax liability.

However, there are some differences as well. For example, the Fidelity fund has 166 holdings, while Van Eck has only 66. That makes the Fidelity fund more diversified. Of course, since the funds are already concentrated in a particular sector, that limits some of the beneficial effects of diversification.

Finally, Van Eck has an expense ratio that's substantially higher than Fidelity Select's. More importantly, the Van Eck fund charges a sales load. Although Van Eck's better performance has thus far compensated for the higher fees, there's no guarantee that it will continue to do so in the future.

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Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own any of the funds or securities mentioned in this article. The Motley Fool has a disclosure policy.