By investing in oil drillers, zinc producers and gold miners, the Van Eck Global Hard Assets Fund is currently in second place in the natural resources mutual fund arena reported The Seattle Times.

Approximately $197.5 million, or nearly 50% of the New York-based fund's total assets, is invested in energy, while 26%, or $99 million, is invested in metals. The remaining 24% is in real estate, paper and agriculture.

"We're big believers in diversification," said Shawn Reynolds one of the fund's seven managers.

In the past year, the fund's assets soared by 56%. Only the $1.5 billion Jennison Natural Resource Fund, also in New York, had higher returns, according to the 20 natural resources funds tracked by Bloomberg.

While the Van Eck fund's increases are indeed impressive, double-digit negative returns aren't uncommon to the sector, either, according to Sonya Morris, a fund analyst at the research firm Morningstar in Chicago.

For instance, in 2005 Van Eck rose 49%, but in 1998 it fell 32%.

In September, the fund minimized its investments in energy, and placed more money into the shares of industrial metal companies.

"On a short-term basis, energy doesn't have a whole lot of upside potential, while at the same time, metals are looking good," said Samuel Halpert, another one of the seven managers of the fund.

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