Gold Funds Hoard Cash

This strategy has helped Gold Shares and World Precious Minerals log five-year annualized returns of 35% and 42%, respectively, as of Thursday's close, according to Morningstar.

By comparison, the 44 precious metals funds tracked by Morningstar have five-year annualized returns of 29%, on average.

Market-timing may not sit well with all investors, however. For one thing, you need to have faith that a fund manager can make the right calls. "It's very hard to do well that way," says Marc Lipson, professor of finance at the Darden graduate school of business administration.

Moreover, funds that have a lot of cash may not perform as intended in your portfolio. It's widely accepted that keeping a small portion in commodities, say 5% to 15%, can reduce a portfolio's volatility. But investors who put 10% of their assets in a gold fund that has 30% of its assets in cash would have only a 7% exposure.

"If my objective is to have exposure to a particular asset, I might not want them to be timing the market," adds Lipson.

Investors may also wonder why they're paying an investment manager. Morningstar estimates the average expense ratio for specialty precious metals funds at about 1.4%, compared to the mean cost of 0.62% for all money market funds.