SKY-HIGH OIL PRICES

haven't been kind to mutual funds with a mandate for socially responsible investing, or SRI. Ever heard of an SRI natural-resources fund? Neither have we.

Over the last 12 months, equity funds with an SRI bent have gained 11.54%, nearly four percentage points less than the average for all equity funds, according to investment-research firm Lipper. Over three years, it's 17.20% annualized for SRI portfolios vs. 20.67% for all equity funds.

Though criteria vary, SRI funds generally avoid sectors that go against certain ethical guidelines. The biggies are alcohol, tobacco, defense, pornography and gambling, but a fund based on Catholic principles might also avoid drug makers, health insurers and hospital operators with ties to abortion.

Energy stocks, particularly those that focus on fossil fuels like oil and coal, also violate the tenets of many SRI funds. Much of the SRI group's underperformance of late can be attributed to its relative distaste for the energy concerns that have led the market for the better part of three years. The top two funds on our SRI screen this week, Ariel Fund and Ariel Appreciation, eschew the sector entirely.

"Oil extraction is a messy business, and being unable to participate in the growth of that industry has been a drag," says Lipper senior analyst Jeff Tjornehoj.

But before we paint SRI funds into the too-constrained-can't-compete corner, it's worth noting that Lipper only requires that they include some sort of moral criteria in their investment philosophy. That's a pretty low entry barrier that leaves room for a large amount of discretion from fund to fund and a lot of stock-picking options for most SRI fund managers.

"When you open these funds up, you're going to see a lot of the same companies that a fund that is not socially responsible would invest in," says Tjornehoj.

You'll even find a little energy. In fact, the Ariel funds are the only funds on our list this week that don't have any energy in the portfolio. Two others, Pax World Balanced and LKCM Aquinas Growth, have stakes in excess of 10% of assets.

If you were so inclined, you could construct an SRI-exclusive portfolio with ample long-term returns and diversity. Over the last 10 years, the performance gap almost disappears: 8.06% annualized for SRI vs. 8.57% for all equity. (Only a half a point a year for a clear conscience!) And, as you can see from the funds that made this week's screen, there's a variety of investment styles in the group.

Of course, SRI equity funds account for only 0.62%, or $32.4 billion worth, of all equity fund assets. Given the high probability that more than 0.62% of the investing population is socially responsible, that means most socially responsible people aren't buying socially responsible funds.

One reason could be the limited number of offerings. Lipper has just 156 equity fund portfolios in its database that it labels socially responsible. But it's also likely that many investors have decided that there are better ways to effect change than through buying only SRI funds like buying better-performing funds and diverting the proceeds to charity.

Still, if you want to mix morals and money, we would never stand in your way. This list, at the very least, will get you started. And who knows? Maybe tomorrow we'll all be driving hybrid cars, eating pesticide-free food and swilling nonalcoholic beer. And best of all, you'll refrain from saying you told us so because you're such a good person.

The Criteria
This week, we asked Lipper to screen the 156 equity fund portfolios in its database tagged with the socially responsible investing label. We demanded five-year returns in the top 50% of each fund's classification and expense ratios in the bottom 50%. Each of the nine no-load funds on our list is open to new investors, requires a minimum initial investment of $5,000 or less and has total net assets of at least $50 million.