NEW YORK ( TheStreet) -- The best-performing mutual funds during the downturn of 2008 were cautious choices that stuck to blue chips. In the rebound of 2009, many of the leaders focused on small-company stocks that skyrocketed when it became clear they wouldn't go under.

Did any funds excel in both years? To find out, I asked mutual-fund-ratings firm Morningstar to screen for U.S. stock funds that finished in the top 25% of their categories in both years. Of 4,200 funds, 106 survived the cut.

Some managed to stay ahead by making well-timed moves in and out of cash. For example, FBR Large Cap Financial ( FBRFX) put more than 40% of assets in cash during 2008, a move that helped the fund outpace 85% of its competitors. Then the fund lowered the cash stake to 5% in 2009, buying depressed shares near the bottom and outdoing 76% of peers. A big cash stake helped Fairholme ( FAIRX) outdo 94% of its large-blend competitors in 2008. ("Blend" funds buy both growth- and value-style stocks.) Well-timed moves into health and financial shares enabled Fairholme to top 91% of peers in 2009.

While both Fairholme and FBR have strong long-term records, I preferred looking for choices that didn't excel because of cash holdings. After all, even the best managers can sometimes mis-time their moves to cash. My final selections finished high in the rankings by focusing on high-quality growth companies selling at modest prices. During the downturn, such solid stocks suffered relatively small losses. When the market revived, the undervalued names surged as their earnings outlooks improved.

My picks include Evergreen Omega ( EKOAX), FPA Perennial ( FPPFX) and Goldman Sachs Growth Opportunities ( GGOAX). Because they limit risk, these all-weather funds could be ideal choices for investors who want to protect their portfolios in a year of erratic markets.

Among the best performers in 2008 was Evergreen Omega, which lost 27% for the year, outperforming 99% of its large-growth competitors. In 2009, the fund returned 42%, trouncing 80% of peers. Manager Aziz Hamzaogullari looks for companies that can grow for years because they have competitive advantages. He seeks to buy when the stocks have temporarily fallen out of favor. After buying, Evergreen aims to hold for several years.

With retail sales sinking in 2008, Hamzaogullari bought Blue Nile ( NILE), an online seller of diamonds and high-quality jewelry. Because it doesn't maintain any stores, Blue Nile can underprice conventional competitors. Offering a wide selection of engagement rings, the company is gaining market share. "The penetration of online jewelry sales is still in the early stages," Hamzaogullari says.

Visa ( V), the credit-card company, is another holding that was depressed because of concerns about consumer sales. "Overall spending has been down, but the portion of spending done on credit cards is increasing," Hamzaogullari says.

By sticking with high-quality companies, FPA Perennial outdid 86% of its mid-cap growth competitors in 2008 and 75% of peers in 2009. During the past decade, the fund has returned 8.3% annually, beating 99% of peers.

Manager Eric Ende seeks companies with high returns on capital, little debt and growing market share. To avoid overpaying, he sometimes takes the strongest company in an unloved industry. A big holding is Signet Jewelers ( SIG), which operates Kay Jewelers and other mall stores. While many competitors are entering bankruptcy, Signet has been maintaining profit margins and taking market share. "We like to own companies that have the ability to buy out competitors and expand during difficult times," Ende says.

He also likes two truckers, Knight Transportation ( KNX) and Heartland Express ( HTLD). Both companies have big cash stakes that they are using to buy new fleets. That will set the companies apart from competitors who are struggling to maintain existing rigs. "The typical trucker has lots of debt and crummy cash flow now," Ende says.

Goldman Sachs Growth Opportunities seeks companies that have high returns on capital because they dominate profitable niches. Manager Steven Barry takes only companies that can grow at least 10% annually for several years. He is wary of 25% growers because rapid expansions are often unsustainable.

A solid holding is American Tower ( AMT), which operates towers used by cellular companies. Revenue is growing as phone traffic increases. Many of the fund's holdings have strong brand names, including Coach ( COH), the leather-goods company.
Stan Luxenberg is a freelance writer who specializes in mutual funds and investing. He was formerly executive editor of Individual Investor magazine.