The roots of socially responsible investing (SRI) trace back to the early Quakers and the founders of the Methodist Church and today’s SRI funds adhere to many of the same tenets espoused by these early visionaries. This offering takes the SRI mantle one step further, with encouraging results. 

The past decade has seen strong growth of socially responsible investing (SRI) funds that seek to provide investors with profits and a clean conscience. But with similar mandates and a limited investment universe, many of these funds are difficult to separate from the herd.

Gabelli SRI Green AAA (SRIGX), which appeared in The Rukeyser 100 for the first time last month, is an outlier. Not only does its mandate go beyond the traditional strictures of a SRI fund, but management believes this offering can go head-to-head with any growth fund.

“We think of ourselves as a global growth fund,” portfolio manager John Segrich said. “We just have a unique approach to identifying where that growth will come from.”

Segrich took the helm of Gabelli SRI Green in 2008 and shifted the fund’s mandate from a run-of-the-mill SRI checklist to one that focuses on sustainability. Like many similar funds, SRI Gabelli Green doesn’t invest in defense contractors, abortion-related firms, or companies that derive more than 5 percent of revenue from alcohol, gambling and tobacco. But management’s investment philosophy is built around the central challenge of population growth.

The United Nations estimates that the global population will grow to 10 billion by the end of the century from almost 7 billion now, straining the planet’s resources, particularly in emerging markets. Gabelli STR Green invests in companies that address the challenges created by a swelling global population. In virtually all cases, a company that fulfills the fund’s “sustainability” mandate will also be a socially responsible company.

The fund has marked some significant triumphs since Segrich took over, though performance has been choppy. The fund gained 67.7 percent in 2009, outperforming the Morningstar World Stock category by 32.4 percent and launching it to the top 4 percent of its category. Gabelli SRI Green in 2010 tracked up a 12.1 percent gain underperforming the category by 1.6 percent. But the fund returned to its winning ways in the first quarter of this year gaining 15.2 percent compared to a 4.2 percent gain for the category.

The fund’s investment in North Carolina-based filtration technology provider PolyPore International (NYSE: PPO) is emblematic of its approach to choosing stocks that dominate emerging industries. PolyPore’s filtration membranes are used in the health care industry for medical procedures such as dialysis, a business line that provides a stable revenue stream.

The company’s other business segment makes battery separators that regulate the orderly mixing of chemicals within batteries. PolyPore’s technology is found in traditional lead-acid auto batteries—a segment that has been revived with a recovery in global auto sales. These membranes are also used in the lithium-ion batteries found in sophisticated consumer electronics. The more exciting long-term prospect for PolyPore, however, would be the advent of the electric car. Mass production of electric cars, which would require high-powered lithium batteries, would be a boon for makers of battery separators and PolyPore is the only pure play investment in this space.

“We would own PolyPore on a standalone basis, but if electric vehicles happen, it’s a kicker to the business,” Segrich said.

The fund’s environmental mandate prohibits investments in most mining firms.  But the fund maintains backdoor exposure to the commodities segment via investments in Horsehead Holding Corp (NSDQ: ZINC), a zinc recycler, and Umicore (Brussels: UMI), a recycler of precious metals. But management also recognizes that “green” isn’t always the color of money.

“People equate ‘green’ with renewable energy. But the economics of most renewables just don’t make sense,” Segrich said.

Last year the fund made the bold decision to exit the majority of its holdings in renewable energies—trades that contributed to the fund’s sky-high 287 percent turnover rate. Segrich also noted that although the fund establishes and holds core positions, there can be significant trading around those positions—another reason for the high turnover rate.

The fund comes with a high price tag; its annual expense ration of 2.01 percent makes it more costly than the majority of its peers. But for investors seeking a SRI fund that has delivered some impressive returns, Gabelli SRI Green is an intriguing offering.