Best and worst: Commodity and Energy Funds

MISCALCULATIONS about an increase in demand for natural gas, coupled with misjudgements about decreases in supply, contributed to the poor performance of the North American Gas investment trust run by Lazards.

Neil Young, manager of the fund, said: 'The environment has not been with us. Five years ago, we believed that there would be an increase in demand for natural gas in North America. Demand has not recovered as much as we anticipated because of the recession and because of a couple of warm winters. The supply of gas around the country has also been eased by the building of pipelines.'

The performance of the Abbey Commodity & Energy fund was held back by the fund's low exposure to gold over the last two years. Just over one-third of the fund is invested in gold, compared with the top-performing funds in the sector, which tended to have double that level of exposure.

Martin Gilbert, Abbey Unit Trust Managers analyst, said he anticipated that the fund's performance would improve because of increases in base metal prices driven by worldwide economic recovery. He said: 'Most of the recent recovery in the fund's performance has come in the base metal sector. We anticipate that it will continue to come from that direction.'

Flemings Investment Trust Management is launching a natural resources investment trust, which the firm hopes will take advantage of what it perceives to be a strong recovery in the oil and gas and metal sectors.

Flemings claims that real oil and metal prices are close to their lowest levels in 20 years.

Ian Henderson, investment trust manager, said: 'The key indicators point to a strong recovery and a number of good years for the prices of both energy and raw materials shares.'

Minimum investment in the fund is pounds 2,000. The public offer is expected to open on 1 November and close on 23 November. Expenses on the fund are fixed at 4 per cent. The fund will run for between two and a half and five years.

Julian Baring, manager of Mercury's top-performing gold fund, managed to anticipate the bottom of the gold market. He said: 'We bought shares in South African mining companies that were showing a loss or only a small profit.'

One of his successes is a South African company called Western Areas. He bought shares at 60p two years ago. They are now worth pounds 12.15.

---------------------------------------------------------------- COMMODITY AND ENERGY FUNDS ---------------------------------------------------------------- Unit and investment trusts The best pounds 1 Mercury Gold & General. . . . . . . . . . . . . . . . . 277.22 2 TSB Natural Resources. . . . . . . . . . . . . . . . . .139.24 3 S&P Gold & Exploration. . . . . . . . . . . . . . . . . 119.03 4 Waverley Australasian Gold. . . . . . . . . . . . . . . .88.22 5 S&P Commodity Share. . . . . . . . . . . . . . . . . . . 85.71 The worst 11 Hill Samuel Natural Resource. . . . . . . . . . . . . . 46.26 12 NM Gold. . . . . . . . . . . . . . . . . . . . . . . . .42.45 13 Allied Dunbar Metals Minerals & Comm. . . . . . . . . . 19.40 14 Abbey Commodity & Energy. . . . . . . . . . . . . . . . 11.14 15 North American Gas. . . . . . . . . . . . . . . . . . . .1.81 The table shows the value on 2 October of pounds 100 invested five years earlier; income reinvested ---------------------------------------------------------------- Source: Micropal ----------------------------------------------------------------