Putting your money where your mouth is - or at least where your values lie - has never been easier.

Investing in socially responsible funds, which integrate personal beliefs and societal concerns, has become prevalent in recent years. And some of the fastest-growing investment products within the socially responsible realm are faith-based mutual funds.

These funds tend to be associated with organised churches and enable members of certain congregations to invest according to their religious and ethical values, says Mark Regier, manager of stewardship investing for MMA Praxis, the mutual fund arm of the Mennonite church in North America.

"People may think it's strange to talk about faith and investing," he says, "but I look at it this way: it's perfectly natural to think about faith in terms of the way you go about the job you do, or the way you raise your child. I believe it's the same way with money.

"People who invest in [funds like ours] care about returns, but, more importantly, they share an understanding of how people of faith view the world."

Ten years ago, faith-based funds contained about $370m in total assets, whereas today they hold almost $17bn, according to Morningstar, the fund data company. Meanwhile, assets held in socially responsible funds grew faster than the entire universe of managed assets in the US during the past 10 years, rising from $639bn in 1995 to $2,290bn in 2005, according to the Social Investment Forum, a Washington-based group.

There are many factors contributing to the popularity of faith-based mutual funds. Perhaps the biggest is that investors are seeking more than just financial results from their investments, says George Rue, the chief investment officer for New Covenant Trust Company, a subsidiary of the Presbyterian Foundation.

"Some people want to say it's a fad, but I am a believer that in this information age, people - particularly younger people - are caring more about the world and are not just focused on getting the biggest dollar return," he says. "It's a concept that has resonated more recently."

George Shultz, president of Ave Maria funds, which target Catholic investors, says another reason for the increased interest in these types of funds is what he terms "the nearer my God to thee syndrome", in homage to the Christian hymn.

"As you get older, people - especially Catholics - tend to think more about the afterlife. They get 'more religious' and some of thatfilters into their investment practices," he says. "And of course, people want to become more wealthy so that they can give more money away, and be more generous."

For investors looking for peace of mind that their money is not backing companies that go against their religious and moral beliefs, there are more choices than ever before. The challenge lies in finding a fund that meets both spiritual and financial requirements.

The Ave Maria funds include six - in addition toa money market - that together contain about $525m. The funds use negative screens to filter out companies that "violate the principles that are core to the Catholic Church". For instance, the fund does not invest in stocks that have any connection to abortion or pornography, and it also omits companies that provide health benefits to unmarried or homosexual partners. However, traditional "sin" stocks such as alcoholic beverage companies are not excluded from the funds' portfolio. All in all, the filter screens out about 400 companies from the Russell 3000, according to Mr Shultz.

MMA includes four mutual funds and a money market that contain about $860m in assets. These funds invest only in companies that "exhibit responsible management practices, support and involve communities, and practice environmental stewardship". Mr Regier says: "We are the epitome of long-term investors. We believe that the resources of the world are ours 'in trust'. We are co-stewards with our clients for God."

The Timothy Plan group of funds targets evangelical Christians. The 12 funds, which began about 15 years ago as a retirement plan for pastors of independent churches, contain almost $540m and shun companies linked to alcohol, gambling and tobacco. They also reject companies associated with issues such as abortion and anti-family entertainment.

"We're here for people who care deeply about these issues," says Art Ally, president of the funds. "We operate biblically and the scripture is clear that there is none righteous. So by definition there is no such thing as a righteous company. But we can see a difference between those that are passively unrighteous and those who support an unholy agenda."

New Covenant Trust is one of the biggest retail fund complexes, with more $1.5bn in assets. The funds use absolute investment screens to limit investments in companies involved in gambling, alcohol and firearm-related issues. In addition, its church-elected committee takes an active role in promoting socially responsible practices. Mr Rue says the committee takes on shareholder activism initiatives and works to "create a dialogue with companies about their practices", adding: "We care about how a company treats its employees, not only in terms of benefits, and compensation, but also in terms of human rights and labour issues.

"Perhaps the most important issue to us is the environment. We work withcompanies and try to get them to be more transparent in reporting their environmental and social statistics, and try to enforce the Ceres principles," he says, in reference to principles that cover environmental protection, resource conservation, risk reduction, product safety, public access to information and accountability. Anita Clemons, vice-president of investments at New Covenant Trust, says corporate managers are dedicating more time to shareholder concerns about social responsibility. "We know that the fallout from the investment market of the late 1990s was [caused] by a lot of greed, and companies not being very good corporate citizens," she says.

"In the bear market, investors stepped back and said, 'Maybe there is something to being a good corporate citizen.' So today if a company is not paying attention to the socially responsible realm, that could hurt its image and the marketability of its brand, which could in turn hurt the company's shares."

The MMA Praxis funds take a similar approach to engaging with companies on their corporate practices, says Mr Regier: "It gives us an opportunity to critique, to challenge, to help find solutions and to refocus corporate attention and energy."

One of the biggest criticisms of socially responsible funds is that they tend to charge higher fees than trad-itional mutual funds. Many faith-based funds, however, pride themselves on low to average costs. For instance, the six Ave Maria funds have expense ratios between 70 and 150 basis points, and the Timothy Plan funds each have an expense ratio of about 150bp, as do the MMA Praxis funds. The expense ratio on New Covenant's funds average about 130bp.

Another criticism of religious mutual funds relates to performance. Some experts say these funds are incapable of performing better than mainstream peers, because filtering out particular stocks typically causes them to lose out on gains of almost half a per cent a year, which could add up in the long term.

But there is evidence to suggest socially screened investments are at least competitive with other mutual funds, according to the Interfaith Center on Corporate Responsibility, which represents religious institutional investors with combined portfolios worth $100bn.

The New Covenant Growth fund, for instance, is up 10.5 per cent over the past three years, whereas its benchmark, the S&P 500, is up 10.4 per cent over the same period.

The Timothy Plan's Small Cap Value fund was up 20 per cent last year, while its benchmark, the Russell 2000, was up 18 per cent. The company's Large Mid Cap Growth fund was up 5 per cent last year; the Russell 1000, its benchmark, was up 9 per cent.

"In the investment world performance is over-emphasised," says Mr Ally of the Timothy Plan. "People want to have faith in how their money is being managed, and they certainly don't want to lose their money. After that, they worry about good performance."