Isas: three best commodity funds Last week, commodity markets - and stock markets in general - wobbled after mining giant BHP Billiton warned that China's demand for steel was waning. This again revived the debate over whether China is managing a gradual slowdown in its economy or will suffer a "hard landing" that would send shock waves around the world. With this in mind we've included a gold fund in our shortlist. Gold is a natural resource but one that has limited industrial usefulness. Its historic appeal has been as a store of value and as a safe haven against volatile stock markets and rising inflation. With both still much in evidence, gold has performed very well, although recent returns have been more muted. This £3.3bn fund invests in gold and in the shares of gold miners. It is managed by Evy Hambro, who has a Citywire A rating. Over five years, the fund has produced a return of 105pc. Although returns are volatile, in the 12 months to the end of February it lost just 1pc, which in the circumstances of 2011 was good. Mr Hambro has recently complained of a disconnect between the high price of gold and the depressed price of mining share prices. Jonathan Miller, Citywire's head of research, said: "Gold gained 10pc in 2011 yet the index of shares that mine and refine the metal fell by 15pc. In the past, a gain in gold would have seen gold equities rally. We back this fund to perform strongly when a return to this pattern takes place. First State Global Resources This £825m fund invests in a wide range of mining companies. Managed by Joanne Warner, it has grown investors' money by 76pc over five years, putting it first in its sector, although it nearly halved during the crash in 2008/09. Mr Miller said: "Joanne Warner holds a core of large mining companies and also makes a bit of room for smaller explorers. This sector has seen a significant rebound over recent months and a monthly saving scheme is the best way to invest and smooth out the ups and downs. Investec Enhanced Natural Resources This fund was launched in 2008 to try and alleviate the inherent turbulence of investing in commodities and natural resources. Fund managers Bradley George and George Cheveley use powers to "short" stocks and make money when they fall in value, as well as when they rise. This way they hope to limit losses when markets are falling and to maximise growth opportunities when they rise. In 2011, the fund fell 15pc, which is actually not bad compared to some rival funds. Over three years the fund, which is betting on rising prices in oil, copper and potash (the essential ingredient of fertiliser), has grown by 35pc. Mr Miller said: "The two managers use sophisticated ways to reduce the fund's volatility, which can be extreme in this area. They have delivered in this regard by limiting the downside in market falls while capturing some of the upside. To find the best picks for your Isa, visit Citywire's Fund Selection iPad app, which can be downloaded free at bit.ly/selectionapp.