For a growing segment of GLBT bears and bulls, the cost of investing in a company they oppose for political or religious reasons isn't worth the benefits of playing the market.

Sure, it's easy to avoid oil companies or military defense stocks, but what about companies that don't offer domestic-partner benefits? What about those that pump millions of dollars into antigay political campaigns?

It's difficult to track even one company for all these issues, let alone the dozens that make up any mutual fund. That's where socially responsible investing comes into play. Socially responsible investing has grown into a powerful force on Wall Street, with investors putting money into companies based entirely on strict environmental and social criteria. The firms that manage socially responsible investments, through either mutual funds or individual accounts, spend their time researching every company--and even pushing for changes on policies they don't like.

One of the biggest arguments against investing in socially filtered funds is that it is much harder for them to earn a solid return each year than portfolios with no social restrictions. Given the size and diversification of most major U.S. companies, it's hard for any major stock to qualify for social funds since the actions of any one of a company's many divisions or affiliates could knock it out.

"There's a lot of debate about if you can get similar retinas from a socially conscious fund," says Jill Hollander, a certified financial planner with Financial Connections, an investment advisory firm in Berkeley, Calif. "Because it's using only a portion of the economy, these funds might not be as diversified as general funds, but we've still seen more and more people going that way when looking to invest."

As with all investing, there are good and bad socially responsible funds. It's up to the investor to do some research before putting money down on a fund. Many funds have thrived for long periods of time. The Chicago-based Ariel Fund, for example, has proved to be a long-term winner, with a 16% return in 2004 (compared with 6% for the Standard and Poor's 500 stock index, a common measure of overall market performance) and a 14% annual return since its inception in 1986 (compared with about 12% for the S&P 500). The fund uses a filter to avoid stocks in tobacco, nuclear energy, and weapons. It also looks for companies that promote diversity.