A Mutual Fund That's Kind to Animals

Loest first looks for companies that satisfy his basic financial criteria. Then he looks for factors that would eliminate them from contention. He then aims for value stocks with high free cash flow, a high return on invested capital, and dividends -- two-thirds of the stocks in the portfolio pay dividends.

"By starting with a value bent, the social part is return-neutral," Loest says. "That means buying for social reasons won't make you any more money than not doing it, nor will it lose you money. It won't affect returns. It just offers people a way to invest in the stock market without stepping outside their moral universe. If they don't care about social issues, I'm still a bottom-up value manager."

That has helped him beat the S&P 500 with a year-to-date return of 7.73% (vs. 7.28%) and a three-year annualized return of 13.56% (vs. 11.96%). But over the past five years, the fund has lagged the S&P, with annualized reurns of 8.9%, vs. 10.27%.

The fund's portfolio is highly concentrated, with about 25 holdings, including health care company McKesson , which is up 21% year to date, and publisher John Wiley & Sons (JWB Quote), also up 21%.

Blue-chip IBM (IBM Quote) is in the fund because it's the seventh-largest corporate purchaser of renewable energy in the U.S.

The fund also holds 3M(MMM Quote) because the producer of adhesives and other industrial products is working to minimize pollution by designing plants to run on solar energy, Loest says.

Loest, 63, started his own money management firm in 1986 and has run his current fund since its inception in 1995. His firm was acquired by Integrity two years ago.

The fund charges a steep front-end load of 5.75%, which tops Lipper's average maximum load of 5.28%. Its expense ratio is 1.56%, topping Lipper's median expense ratio of 1.21%.