As the global appetite for energy continues to increase rapidly, governments and corporations alike are devoting greater resources for the discovery of new energy sources as well as the development of more efficient technology in this domain. In fact, newer economic powerhouses such as China are discovering that the going is even tougher for them. Prices of these invaluable resources continue to rise at a steady rate and the energy sector is clearly a lucrative investment option. Mutual funds are a superior option for forays into the industry as they reduce risks involved by holding widely diversified portfolios.

Below we will share with you 5 top rated energy mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all energy funds, investors can click here to see the complete list of funds.

Invesco Energy Investor (FSTEX - MF report) seeks long-term capital growth. It invests a major portion of its assets in energy-related industries. It invests mostly in equity securities and also in derivatives and other financial instruments whose economic characteristics are similar to these energy securities. This energy mutual fund has a one-year return of 10.7%.  The fund has an expense ratio of 1.15% as compared to category average of 1.47%.

Guinness Atkinson Global Energy (GAGEX - MF report) invests a major portion of its assets in both domestic and foreign companies of all market capitalization. These companies are involved in the production, exploration or distribution of energy, and are also involved in research and development of alternative energy sources. The fund seeks capital growth over the long run. This non-diversified energy mutual fund has a one-year return of 14.5%.

As of June 2014, this fund held 45 issues with 3.61% of its assets invested in Newfield Exploration Co

Integrity Williston Basin/Mid-North America Stock A (ICPAX - MF report) seeks long-term capital growth. The fund invests a lion’s share of its assets in US and non-US companies which gain from resource developments in the Williston Basin area and/or Mid-North America area. It may also invest in development stage companies. This energy mutual fund has a one-year return of 20.7%.

This fund has an expense ratio of 1.41% as compared to category average of 1.47%.

Waddell & Reed Energy A (WEGAX - MF report) invests a lion’s share of its assets in companies whose primary operations include exploration, discovery, production and distribution of energy and alternative energy sources. It may invest all of its assets in non-US firms. It invests in both value and growth stocks of companies all over the globe including those from emerging countries. This energy mutual fund has a one-year return of 13.5%.

David P. Ginther is the fund manager and has managed this fund since 2006.

Ivy Energy A (IEYAX - MF report) seeks capital growth. It invests a large portion of its assets in companies having their presence in the energy sector. It invests in energy related companies involved in exploration, production and distribution of energy sources. This energy mutual fund has a one-year return of 13.3%.

As of June 2014, this fund held 72 issues with 4.4% of its assets invested in Schlumberger NV.

To view the Zacks Rank and past performance of all energy mutual funds, investors click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.