Natural Resources funds, last year’s top performing investment fund sector despite a loss in December, resumed their winning ways in January, as crude-oil prices topped US$49 a barrel during the month.

The Morningstar Canada Natural Resources Fund Index gained 3.1% in January. Five other fund indices posted gains of more than 2% during the month, led by Canadian Income Trusts, up 2.9%. Asia ex-Japan Equity and Emerging Markets Equity both rose 2.7%, Asia/Pacific Rim Equity 2.2% and European Equity 2.1%.

Only six of the 32 Morningstar Canada fund indices produced negative returns during January, with Precious Metals and Science & Technology losing 4.8% and 2.4% respectively. The results are based on preliminary performance data from Morningstar. Final performance figures will be published at mid-month.

“Oil’s price was driven by a combination of factors including a cold snap covering much of North America, worries surrounding the Iraqi elections, and the expectation that the Organization of the Petroleum Exporting Countries would cut production,” said Morningstar Canada analyst Brian O’Neill. “By the end of the month, however, prices cooled a little as the Iraqi elections went off without major problems, and OPEC kept production levels steady.”

Precious metals funds were hurt by a strengthening U.S. dollar, O’Neill said. “Gold prices, which are typically negatively correlated to the greenback, dropped from US$435 per ounce to US$422, and major gold stocks dipped slightly,” he said.

Funds focused on North American stock markets underperformed those invested abroad, with the broad Canadian Equity Fund Index marginally outpacing its continental rival with a 0.2% return, compared with 0.04% for the U.S. Equity fund index. Funds invested almost entirely in Canadian stocks lost the most among these funds, as the Canadian Equity (Pure) fund index fell 0.7%.

Among other key fund indices, Canadian Bond rose 0.8% and Canadian Balanced gained 0.4%.