Parnassus Small Cap has been a top performer among small company blend funds and has also held up better than many of its competitors in down markets. At $288 million in assets, it remains nimble enough for its manager to navigate the small company universe of stocks. With an annual expense ratio of 1.2%, it's also one of the more reasonably priced offerings among small-cap mutual funds.

Other funds, particularly those with a significant presence in the financial sector, have had a tough time recouping the huge losses from late 2007 and 2008. A modest 29 basis point expense ratio hasn't been enough to outweigh the impact of a large presence in the troubled sector for Vanguard's FTSE Social Index Fund. Although performance has improved recently, the fund, which follows the FTSE4Good U.S. Select Index, has lagged both the S&P 500 and its large-cap growth peers over the last three, five and ten years.

A number of environmentally focused offerings have seen high levels of volatility as investors remain concerned about slow economic growth and cuts in government subsidies for alternative energy. After falling 61% in 2008, Winslow Green Growth Fund bounced back 49% in 2009 but fell to the bottom of the small company growth group in 2010. In a third quarter commentary, fund manager Jack Robinson assured investors that "we remain committed to our long-term investment thesis, and strongly believe that investments in environmentally sustainable solutions have the potential to yield positive results over time."

Like performance, fees are also a mixed bag. According to Morningstar, 60% of socially responsible funds have above-average expense ratios, which drag down returns. Still, a number of well-known fund families such as Ariel, Domini, Neuberger Berman, Parnassus and Pax World all have mutual funds whose expense ratios match or beat the 1.3% to 1.5% averages for equity mutual funds.

Socially responsible exchange-traded funds cut those annual expenses by at least half. In contrast to socially responsible mutual funds, which tend to diversify among different market sectors, most ETFs focus on clean technology and alternative energy. Some, such as the PowerShares WilderHill Clean Energy Portfolio (PBW) combine solar and wind energy companies in one portfolio. Others, such as Market Vectors Solar Energy (KWT) or PowerShares Global Wind Energy Portfolio (PWND) zero in on one group or the other.

With government subsidies down and energy prices in check, alternative energy ETFs underperformed the market this year by a significant margin. Wind ETFs, which fell some 30% during the year, fared the worst. More diversified "clean technology" ETFs, which invest in alternative energy as well as other industries that work to improve the environment, generally did better than pure solar and wind plays. 

But alternative energy ETFs could see better days when investors start to focus on favorable longer-term trends. In a report titled "Clean Energy Trends 2010," research firm Clean Edge notes that in the United States, approximately $100 billion of the $787 billion stimulus package will go to clean-tech investments. South Korea's Green New Deal may generate as much as $84 billion in clean tech investments by 2013. China could spend $440 billion to $660 billion on clean energy over the next decade. High profile projects, such as Google's $1.8 billion commitment to finance wind power transmission lines and First Solar's announcement to build two large manufacturing plants in the U.S. and Vietnam, are bringing renewed attention to the sector.

Valuations are also attractive compared to historical averages. In contrast to the pre-crash, triple-digit price earnings ratios, many alternative energy ETFs have much more reasonable valuations that are within range of the broader market averages.

As alternative energy ETFs search for solid footing, two broader socially responsible offerings, iShares MSCI ESG Select Social Index (KLD) and iShares MSCI KLD Social 400 Index (DSI) continue to make inroads with investors. The former fund, which has $124 million in assets, has outperformed the S&P 500 Index in two of the last four calendar years. It follows the large-cap universe and only excludes tobacco companies. The KLD Social 400 Index, which has $113 million in assets, consists mainly of large-cap stocks but includes some small and mid-cap names as well. The ETF does not include companies involved in tobacco, firearms, nuclear power, military, weapons and gambling.

With their 50 basis point expenses ratios, these two diversified ETFs are somewhat pricier than SPDR S&P 500's (SPY) 9 basis point expense ratio or Vanguard's S&P 500's (VOO) 3 basis point levy. Still, given their competitive long-term performance, they are solid indexing choices for those who want large company index exposure within a socially responsible framework.

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