Socially responsible investing (SRI) is gaining popularity in the investment world. This growing trend adds another level to the investment selection process for some investors: screening investments based on one or more social criteria.

Socially responsible funds offer the advantage of allowing you to align your investment choices with your personal beliefs. In addition, they provide you the opportunity to invest in a portfolio of diversified corporate equities screened for specific social and environmental criteria. Based on the Social Investment Forum's 2003 Trend Report, more than one out of every nine dollars under professional management in the United States was involved in socially responsible investing.

Social screens can vary from one fund to another. Managers of socially responsible funds generally proceed with the investment selection process by choosing investments that they believe fit the financial objectives and risk parameters of the fund. They just take the selection process a step further by screening those investments according to the fund's social criteria. The majority of investment managers use three or more screens for their portfolios - including tobacco, gambling, alcohol, weapons and the environment. Assets are also frequently screened on issues pertaining to human rights, labor rights, birth control and abortion. A fund's social screening policies should be explained in the prospectus and perhaps in other documentation.

Word of caution. In general, social concerns may not be the primary factor in your investment decision-making process. Perhaps your first consideration will be to select investments suited to your financial objectives and risk tolerance. Then you can evaluate those investments to determine which ones best suit your personal values. For some individuals, nonscreened investments are the better choice.

The performance of socially responsible investments in recent years should not be taken as an indication that they are better investments than their nonscreened counterparts. There could just as easily be periods of a few or several years when they do not perform as well as their nonscreened counterparts. Also, it is important to look within investment categories and compare apples to apples (i.e., don't evaluate screened growth stock funds against nonscreened growth stock funds) so you can find suitable investments with the right financial characteristics for your needs.