NEW YORK ( TheStreet) -- These are heady days for Royce Funds. Of the company's 18 mutual funds, 17 have outperformed their categories this year, according to Morningstar. All 10 Royce funds with five-year records have beaten their rivals over that period. Part of the success can be attributed to the fund company's cautious approach. Royce managers seek out stocks with long track records for maintaining strong balance sheets. The businesses must maintain wide profit margins and rich cash flows. Such stocks have proved resilient in recent years, particularly after last year's stock-market crash separated the weak from the strong. "Our funds held up relatively well during the downturn, and then they came back quickly this year," says Whitney George, a Royce portfolio manager. In 1972, Charles Royce bought Royce Pennsylvania Mutual ( PENNX), a fund he still runs. Over the years, the company has opened a series of funds that specialize in smaller stocks. Royce Total Return ( RYTRX) holds dividend-paying small caps, while Royce Premier ( RYPRX) focuses on high-quality mid-cap growth and value stocks. Royce Micro-Cap ( RYOTX) only takes shares with market values of less than $500 million. While some of the funds fit in the growth, and growth and value ("blend"), boxes, Royce managers consider themselves value investors. They look for companies that have become temporarily out of favor and sell for substantial discounts to their fair values. One of the top performers is Royce Low-Priced Stock ( RYLPX), which has returned an annual average of 12% during the past decade, exceeding 96% of its small-blend competitors. Whitney George typically buys stocks that sell for $10 or less. Such companies tend to be beaten down and often overlooked, he says. "There is a stigma attached to low-priced stocks," George says. "Many institutions are required to sell anything that falls below $10 to protect against getting a goose egg."