Forester Value Fund ( FVALX) returned 0.4% last year and won a place in the record books. Of more than 4,500 domestic equity funds tracked by Morningstar ( MORN), Forester was the only one to finish in the black for the year. While luck surely played a role in the winning performance, it shouldn't be surprising that Forester finished in the top ranks. The fund has long followed a pattern, excelling in downturns and lagging during good times. In 2002, a year when the S&P 500 lost 22%, Forester returned 5.7% and outdid 99% of domestic equity funds. The fund finished near the back of the pack in 2006, a year when the S&P 500 returned 16%. Forester delivers extreme results partly because it keeps a concentrated portfolio, typically holding about 40 stocks. In contrast, most domestic equity funds hold more than 100. Because they place big bets on a few names, concentrated funds like Forester can be volatile, leading one year and lagging the next. Many investors use concentrated funds the wrong way, buying when they are hot and selling as soon as the managers suffer an inevitable cold spell. But concentrated funds can make sound holdings if they are held for long periods. A fund like Forester can help to diversify a portfolio, cushioning downturns. To get the best results from a concentrated fund, pick one with a strong long-term record and make sure that you understand how the manager has fared in various market conditions. Some concentrated funds resemble Forester and do well in downturns. Top choices for hard times include value specialists, such as Osterweis ( OSTFX) and Yacktman Focused ( YAFFX). On the other hand, some concentrated growth funds lead in bull markets and trail in bear markets. This group includes CGM Focus ( CGMFX) and Janus Twenty ( JAVLX).