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This year, small-cap value funds have gone from wallflowers to disco-dancing fiends, and we've singled out a few for you to look over.

These funds focus on obscure small fry, and that typically keeps them far from the spotlight. In general, they usually focus on stocks with market caps below $1.5 billion or so. They also follow a value-investment strategy, which essentially means they're bargain hunters scouring the market for stocks of steadily growing companies with low stock prices relative to their peers or the overall market.

Given the market's obsession with growth stocks in recent years, these funds haven't exactly had the wind at their backs. Of course, this year is a different story as growth and tech stocks have come back to earth. The average small-cap value fund is up more than 8%, compared with an 8% drop for the

S&P 500

and losses for most growth funds, according to



Most investors probably haven't given much thought to owning a small-cap value fund, but their tendency to move in different cycles than big-cap growth stocks -- evidenced by their positive returns this year -- show why diversification works. If you'd like to put a modest portion of your portfolio in a small-cap value fund, we've done some shopping for you.

We sifted the 123-fund category for those funds that beat their average peer over the past one- and three-year time periods. Here's a top-10 list, ranked by one-year returns.

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As you can see,

Royce Funds

is a player in this corner of the market. Charles Royce and his able colleagues have consistently demonstrated their skill at picking through the small-cap world's dustbin. Three of their no-load funds made our cut, but you might also check out

(RYTRX) - Get Royce Total Return Fund Investment Class Report

Royce Total Return, which is a solid choice for risk-averse folks. The reason this fund isn't on our list: Its 12.7% gain over the past year didn't crack the top 10.

Another intriguing fund you might add to your short list of candidates is the no-load

(TAVFX) - Get Third Avenue Value Fund Insti Class Report

Third Avenue Value fund. Veteran stock-picker Marty Whitman has a buy-and-hold approach and a taste for financial stocks. While the fund's 17.9% gain over the past 12 months didn't put it on our list, Whitman has beaten at least 75% of his peers over the past one-, three-, five- and 10-year time periods, according to Morningstar, and that's no fluke.

In addition to screening for these funds, we also X-rayed the leading funds' portfolios. Here's a look at the cumulative top-10 picks of our 10 leading funds. As you might expect, there aren't a lot of household names here, and given the thousands of small-caps to choose from, there's not a lot of consensus, either.

Editorial Assistant Dan Bernstein contributed to this article.