NEW YORK ( TheStreet) -- Religious groups have long designed mutual funds. Besides seeking to offer competitive returns, the portfolio managers shun certain kinds of offending stocks. Protestant funds avoid alcohol and gambling companies, while Catholic managers shy away from businesses that facilitate abortion. According to Morningstar, the faith-based funds have $30 billion in assets.Because religious managers face limitations, you might expect these funds would deliver uninspiring returns. In fact, a number of the faith-based funds have recorded sizzling results. Among the leaders is Amana Funds, which follow Islamic laws. During the past 10 years, Amana Trust Growth ( AMAGX) returned 10.9% annually, outdoing the S&P 500 by 4 percentage points and topping all large growth competitors, according to Morningstar. AMANX) returned 10.8% and surpassed 99% of its large blend peers. Other faith-based funds that have finished near the top of the standings include Ave Maria Rising Dividend ( AVEDX), a Catholic choice, and Protestant winners such as Thrivent Diversified Income Plus ( AAHYX) and Timothy Plan Large/Mid-Cap Value ( TLVAX). Do the religious screens boost returns? Not necessarily. In a study of Islamic funds, Andreas Hoepner, a researcher at the University of St. Andrews in Scotland, found that most portfolios lagged their benchmarks. According to other researchers, the average Protestant and Catholic funds have produced unexceptional results. Still, there is no evidence that the screens hurt performance. Portfolio managers say they are able to find good stocks that survive the screens. Instead of using their own employees to manage portfolios, many of the top-performing faith-based companies have excelled by hiring outsiders known as subadvisors. The subadvisors often work for a variety of clients, including institutional investors and wealthy individuals who don't necessarily apply religious screens. WHGLX) and other funds that focus on companies with strong cash flows and little debt. By seeking undervalued stocks that are improving their balance sheets, Westwood has excelled in downturns. The recipe has succeeded at the Timothy Plan fund, which has returned 8.5% annually during the past 10 years, outdoing 96% of large blend peers.