The Timothy Plan Aggressive Growth Fund (TAAGX). Have you ever wanted a complimentary moral audit? On this fund's website, that's only one of several services offered to potential clients who are interested in investing in accordance with Christian values. There's also a "Hall of Shame," which lists companies the fund avoids, and a section to help parents identify potentially offensive video games. Like the other Timothy Plan funds, the Aggressive Growth Fund stays away from companies that are connected to alcohol, tobacco, gambling, abortions, pornography, or same-sex marriage. While the Timothy Plan funds have plenty of company in the religious and moral investing space, their offerings stand out for their rigorous screens and strong wording: The company explicitly evokes the "culture war" that its funds are fighting. While these commitments offer a reasonable outlet for shareholders who prefer to invest in accordance with their religious beliefs, the strategy has not been particularly profitable for the Aggressive Growth Fund. Its annualized returns over the last one, three, and five years all place it in the bottom quartile of Morningstar's mid-cap growth category.
The Adaptive Allocation Fund (AAXCX). With its website, which is www.unusualfund.com, this fund seems to be begging for inclusion in this list. Since the fund's adviser is a company called Critical Math, it unsurprisingly takes a rather formulaic approach to investing. In fact, the fund, which launched in 2006, uses upwards of 80 "fundamental" models—in addition to a number of "technical" models—to decide where to invest. With these models, the fund's managers take the jack-of-all-trades approach to a new level, giving themselves the ability to invest any portion of the portfolio in essentially any type of security for as long of a time period as they see fit. In its brochure, Critical Math proudly declares, "Because we are so flexible, and our investments can be invested in almost any combination of assets, the funds we advise could, at any point in time, be classified as money market funds, or government securities funds, or large cap growth funds, or large cap value funds, or mid cap growth or value funds, or small cap growth or value funds, or balanced funds, or growth and income funds, or, even rarely, long-short funds!" Whew! Despite the fund's attempts to avoid characterization, Morningstar lumps it in with mid-cap blend funds. In 2008, the fund's returns ranked it in that category's top percentile.
The Women's Leadership Fund. Swiss company Naissance Capital will launch this fund next year with the goal of promoting gender-conscious investing. When the fund opens its doors, it will focus on companies that have significant female representation in their leadership teams. And while the fund is largely idealistic in nature—20 percent of the fees it collects will be set aside for promoting opportunities for financially disadvantaged women—it also points to research claiming that companies that embrace gender diversity in their boardrooms tend to perform better. Still, like all socially screened funds, this one will come with some risks. "Any time you buy a fund that has investment restrictions on it—whether they be social or religious or industry-related—you have to be willing to accept lower returns in exchange for things that are important to you," says Adam Bold, founder of the Mutual Fund Store, an investment management firm with more than 65 U.S. locations. "That doesn't mean that you'll get lower returns, but going into it . . . you have to be willing to accept them."