Investors who stuffed money into the stock market back in 2000, hoping to cash in on some long-term growth, have been sorely disappointed. This "lost decade" has pretty much been a wash, with stocks hovering around where they were back in 1999. But some investments did better than finish the decade back where they started. Some, in fact, have posted some pretty impressive double-digit annual gains.

Head of the class
According to Lipper Analytical data, the honor of being the top-performing mutual fund of the past decade goes to USAA Precious Metals and Minerals (USAGX). The fund posted an annualized 24.4% gain in the past 10 years, compared to about a 1% annualized loss for the S&P 500. As its name implies, USAA Precious Metals and Minerals invests in companies involved in the exploration for and mining of gold, silver, platinum, and other precious metals. Recent returns have been fueled by the red-hot performance of holdings like Royal Gold (NASDAQ:RGLD), Goldcorp (NYSE:GG), and Agnico-Eagle Mines (NYSE:AEM), the latter of which is up nearly 300% in the past five years.

As far as precious-metals funds go, this one actually is one of the better choices in the actively managed fund realm. The fund boasts a long-tenured lead manager who has been onboard since 1994, a reasonable expense ratio for the category, and a top-rated performance track record. Investors looking for cheaper exposure to the gold market could always buy an exchange-traded fund like the SPDR Gold Shares (NYSE:GLD) or PowerShares DB Gold (NYSE:DGL), but as far as active funds go, this one is a solid bet for precious-metals investors.

We're golden
But just because this USAA fund landed at the top of the heap for the past decade doesn't necessarily mean you should buy it. While I don't want to take anything away from the USAA fund's talented management team, I do want to point out a few things to be aware of. First and foremost, investors need to take pains not to chase performance. Just because the fund topped the charts in the past 10 years doesn't mean it will do equally well in the coming decade.

Furthermore, if we look at the other funds that landed near the top of the charts in the past 10 years, it's pretty obvious that there's a theme going on here.

Decade's Top-Performing Funds

10-Year Return

USAA Precious Metals & Mining

24.4%

ING Russia (LETRX)

23.8%

Black Rock Energy & Resources (SSGRX)

23.1%

Evergreen Precious Metals (EKWAX)

22.7%

Tocqueville Gold (TGLDX)

21.7%

First Eagle Gold (SGGDX)

21.4%

Van Eck International Investors Gold (INIVX)

21.4%

GAMCO Gold (GLDAX)

20.3%

OCM Gold (OCMGX)

19.7%

Oppenheimer Gold & Special Minerals (OPGSX)

19.6%

Source: Morningstar Principia.

Of the 10 highest-performing funds, nine are gold or precious-metals funds. This speaks more to the incredible returns that this asset class as a whole has produced in the past decade than the specific stock-picking skill of any of these funds' managers.

And while gold-related stocks have been the big winners in this past decade, that doesn't necessarily mean that they will be again over the next 10 years. While gold itself may in fact have further to rise, signs of a bubble are emerging, making it more likely that this shiny metal may encounter resistance in the future, despite concerns over a falling dollar and the government's inflationary monetary policy.

Not necessarily necessary
What's more, in spite of the recent media frenzy over gold, most investors don't really need dedicated exposure to precious metals. That may seem counterintuitive, given that metals performed so well in the past 10 years, but these funds are actually quite risky. Sure, record performance in 2009 pushed many of them to the head of the fund pack, but targeted funds like these can also post equally dizzying double-digit drops over certain time frames. Over the very long run -- 20 or 30 years or more -- stocks have still come out ahead as the winner.

However, if you insist on investing in a gold or precious-metals fund such as Market Vectors Gold Miners ETF (NYSE:GDX) or iShares COMEX Gold Trust (NYSE:IAU), make sure that such an allocation is a very small percentage of your overall portfolio. USAA Precious Metals & Mining is also a decent choice if you want an actively managed metals fund. However, there's no guarantee that this decade's top performer will post a repeat performance in the coming decade, so investors should invest here, and elsewhere in this asset class, with considerable caution.