A new socially responsible investment (SRI) fund claims to have more stringent criteria for selecting stocks than any other ethical fund on the Irish market.

The Dolmen Green Effects Fund, which yesterday signed up its first Irish customer, invests in just 25 companies listed on the Nature Stock Index (NAI).

Mr Richard Power of Dolmen Butler Briscoe, the firm offering the ethical fund, said the NAI followed "very strict rules" and did not simply include stocks in companies that made "quasi-environmentally friendly statements".

Companies are excluded from membership in the NAI if they are involved in nuclear energy, military equipment, discrimination against women, pornography, gambling and tobacco.

The Green Effects Fund has been in operation since October 2000, but has been primarily sold into the German retail market.

The fund, originally set up by the Austrian firm Öko-invest and a German magazine called Natur, invests in household-name companies such as the Body Shop and coffee shop chain Starbucks, as well as companies involved in industries such as wind farming, water purification, organic food and contraceptives.

"The Green Effects Fund is the only pure-play ethical fund on offer in the Irish market to Irish investors," Mr Power claimed.

Dolmen's first Irish customer is Mr Ciarán Cuffe, the Green Party TD who recently sold shares he owned in major oil companies following a political outcry. Mr Cuffe is now investing in SRI funds instead.

Critics of SRI funds argue that their screening criteria for stocks hampers their ability to provide the best returns for investors.

"In the year-to-date, the fund is up 4 per cent, which is in line but slightly behind market returns," Mr Power admitted. But over three years the Green Effects Fund outperformed global indices by 17 per cent, he added.

Meanwhile, returns on Hibernian Investment Manager's SRI Managed Fund, launched last year, are running at 2.2 per cent for the year to the end of June, compared to 3.1 per cent for its balanced managed fund.

Friends First's ethical Stewardship Fund, with a return of 4.27 for the year to date, is around the mid-table mark in terms of the performance of the company's funds over this period, but near the bottom in terms of performance over three and five years.

The Dolmen fund has an annual management charge of 0.75 per cent, as well as initial sales commission of 2 per cent. The minimum investment is €5,000.