Energy always seems to be clouded by controversy, at least when it's mentioned as an investment. It could be some conflict in the Middle East region playing out in the news, or skyrocketing prices at the gas pump. In the last month, the BP blowout in the Gulf of Mexico has energy back in the spotlight. It s only now, after many weeks, that workers may have found a way to plug the leaking well.

There are two different scenarios when it comes to energy mutual funds, or what Morningstar labels natural resources. First, there is the long-term view or the last five years. In that period, natural-resources funds returned an average annual 11.4%. That's double the performance of the next closest domestic equity fund category. Alternatively, there is the short-term perspective, over the last month and year-to-date period. In that time frame, natural-resources funds have been dragged down in part by the BP (BP) spill, and have posted deficits of 9.3% and 3.9%, respectively a record that puts them dead last among 21 U.S.-focused equity categories.

To figure out an investment strategy in this area, we focused the fund screen this week on natural-resource funds. It is one of the smallest groups of funds we cover all year, with just 129 funds and share classes to analyze. We narrowed that group by screening for our usual criteria: decent fees, low minimum investments and open to new money. That left us with 17 funds. We then added in performance criteria over the trailing three- and five-year time periods. Just two funds managed to make that cut. They are listed on the table below.

As you can see from the list, these funds haven t been doing well in 2010. Each one is in the red. Indeed, only two funds out of the original 17 were in positive territory this year, U.S. Global Investors Global Resources and Rydex Basic Materials. But those two funds didn t make our long-term performance cuts, so they're absent from the table.

We always have a hard time recommending energy funds to individual investors. That s because most mainstream investors get plenty of exposure to this sector with a simple, low-cost S&P 500 index fund. That benchmark has around a 10% exposure to energy and its biggest holding is Exxon Mobil. That is plenty for most investors.

Energy funds are also risky and volatile. Standard deviation is a way to measure a fund s performance versus a mean. The greater the fluctuation in the fund s returns, the higher the standard deviation. Usually a single-digit standard deviation is desirable. Some energy funds exceed a 20 standard deviation. Investors endure that because of the allure of big returns, but people looking for smoother rides should go elsewhere.

The criteria: The funds on our list are part of Morningstar s natural resources category. They're open to new money, require a minimum investment under $5,000 and charge an annual expense ratio of less than 1.5%. In addition, they had performance track records that put them in the top 40% of the category during the trailing three- and five-year time periods. As usual, we did not include funds that charge sales loads.