The Big Screen: 10 Smaller Value Funds You Can't Afford to Ignore

Like the water boy who sheds his specs, dons a helmet and becomes a gridiron hero, mid- and small-cap value funds are getting a lot more popular.

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Like all value funds, they scour the market looking for unloved companies they think are trading for less than they're worth. Picking through the dustbin is never a glamorous exercise, and because these funds focus on smallish and often obscure companies, they're easy to ignore. That said, a diversified portfolio would have about 15% of its money in these funds, whose tech-light style has flourished recently.

Small-cap value funds are the top-performing fund category over the past 12 months, with an 18% gain, on average, according to Chicago fund-tracker Morningstar. The average mid-cap value fund isn't far behind with an 11% return, compared with a 22% slide for the S&P 500 .

As you might expect, money is gushing into these funds. So today the Big Screen is sifting the some 250 funds in these bins to pick out a few we think you can't ignore. In each case we rounded up the funds that beat their average peer over the past one, three and five years. Then we yanked out any funds that have changed managers in the past three years, are closed to new investors or carry a minimum investment north of $10,000. Finally, we ranked the survivors by their five-year annualized returns and picked the top five. ...