The political environment is going to heat up over the coming year, as the 2008 elections draw near. You'll likely find yourself discussing politics at your local deli, at the dentist's office, and at social gatherings. If you want to channel your political convictions into your investing, you can -- via some new mutual funds.

Check out, for example, the new "Blue" funds, which hold companies that are viewed as socially progressive and that contribute to the Democratic Party. According to SmartMoney magazine, "In order to qualify, a firm's top three executives and its political action committee must be a net contributor to the Democratic Party over the last 10 years. It then must pass additional ethical screens based on corporate governance, treatment of employees, human rights, and the environment."

When I tried to look up the funds, The Blue Fund's website noted that even though the Blue Large-Cap Fund and Blue Small-Cap Fund both started trading last October, they don't yet have ticker symbols. According to Morningstar, the funds are both tiny, with about $1 million in assets in the large-cap fund and $530,000 in the small-cap fund. You'll find shares of companies such as Apple (NASDAQ:AAPL), Lehman Brothers (NYSE:LEH), and Colgate-Palmolive (NYSE:CL) in the large-cap fund, while the small-cap fund holds stocks such as Parametric Technology (NASDAQ:PMTC), Guess? (NYSE:GES), and Sotheby's (NYSE:BID).

Pros and cons
So should you get in line to invest in this fund? I'm not rushing, despite my left-leaning tendencies. According to a BusinessWeek article, the fund was inspired by research showing that "companies whose officers or political action committees gave to Democrats had outperformed major stock indexes over the past five years." That's promising, but it's not enough.

For one thing, past performance doesn't guarantee future results. And five years is not a long period. Performance over the coming five years may vary considerably from the past five. On top of that are relatively high annual fees -- of around 1.5% for the large-cap fund and 1.75% for the small cap. But in their first six months, the funds have gotten off to a decent start -- both of them had performed slightly better than their respective benchmarks as of March 31.

Note also that the funds' managers aren't assessing companies' investment potential. They're not looking for undervalued firms, for example. Instead, they're relying on the "blue" characteristics of selected firms to lead to outperformance. So they're really producing a politically oriented index fund.

Finally, I object to companies making political contributions in the first place. After all, our government should be by the people and for the people, not all about corporations. In the BusinessWeek article, Costco (NASDAQ:COST) CEO Jim Sinegal agreed, explaining that while he himself donates to Democrats, his company doesn't make political contributions, since it's "shareholders' money."

The red side
If you lean to the right and want to invest accordingly, things are a little more complicated. I'm not aware of any explicitly politically conservative funds. There are, however, religious funds that lean right, such as the Timothy funds that I mentioned in this May 30 article. And here's another that I just became aware of: Ave Maria mutual funds, which reflect Catholic values (shunning abortion-related companies, for example).

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Longtime Fool contributor Selena Maranjian owns shares of Costco. Colgate-Palmolive is a Motley Fool Inside Value recommendation. Costco is a Stock Advisor recommendation. Try any one of our investing services free for 30 days. The Motley Fool is Fools writing for Fools.