Morningstar Canada says that equity funds continued to post strong gains in the second quarter of 2014, with natural resource investments leading the way.

Eighteen of the twenty-one Morningstar equity fund indices were up during the quarter, and eleven of these posted gains of 3% or more. The best performing index was in the energy equity category, which posted an increase of 13.7%. The natural resources index also performed well during the period, with a 10.6% increase.

"Fund returns in these two categories benefited from oil and gas stocks that rose with escalating oil prices, as the current conflict in Iraq sent oil prices higher in June in light of uncertainty surrounding the country's oil supply. Iraq has become an important oil producer over the past few years, pumping more than 3 million barrels each day," comments Morningstar research analyst Vishal Mansukhani.

The precious metals category also yielded high returns, with a 12.1% increase in the second quarter of 2014. "Gold stocks and stocks that are positively correlated to the price of gold were helped by geopolitical tensions in Ukraine and Iraq, which continued to spur demand for the metal as a safe haven for investors' capital," explains Mansukhani.