I use basically one factor to pick mutual funds for my rollover IRA: 10 year return. I look at the big list of mutual funds on eTrade and pick the ones with the best ten year return. Sometimes I look at the Morningstar rating. Sophisticated!

Ah, whatever. Most of my picks have turned out OK for me. Some have done very well, even. But one fund has consistently beaten all others over the past few years: AMAGX / Amana Trust Growth. While the others have struggled through all the big dips of the past few years, it just keeps going. It rocks.

But, it wasn't until last week, thanks to a random eTrade info message, that I learned how the investments within AMAGX are picked:

Amana Mutual Funds Trust is designed to provide investment alternatives that are consistent with Islamic principles. Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is not permitted by Islamic principles. Some of the businesses not permitted are liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

The Funds do not make any investments that pay interest. In accordance with Islamic principles, the Funds shall not purchase bonds, debentures, or other interest paying obligations of indebtedness. the businesses not permitted are liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations.

If I'd known that, I probably would've never bought AMAGX, thinking such a strategy would avoid too many good buys. But, I would've been wrong, because whatever they're doing is clearly working out. I suppose that's a strong point in favor of my simple 10-yr return strategy - focusing on that one number keeps me from introducing my own ridiculous thoughts into these decisions.

More disturbingly, I might have avoided it on principle: I wouldn't want to encourage religious thinking if I could help it - and with thousands of MFs out there, avoiding one is no problem. Maybe there's an atheist fund somewhere! But, that would've been totally out of character for me, since that principle never affects anything else I buy: I happily eat Hebrew National hot dogs and dine at Indian vegetarian and Halal restaurants; I buy stuff from stores that play Rush Limbaugh from behind the counter, and I eat at Cookout which prints Christian messages on its cups. So no, I don't factor religion into my purchases. But I do find it strangely ironic that the best-performing fund in my portfolio does.