Entire careers have been made out of following the historical performance of certain stocks and sectors during all types of market conditions: from roaring bull markets to bearish recessions. Now, market watchers are looking to history once again, hoping to determine what will lead us out of this unprecedented downturn.

Three areas are under scrutiny: growth shares, technology and small caps, all of which are known to perform well coming out of broad market declines. According to Lipper, large-cap growth stock funds have returned 3.5% this year, eight percentage points ahead of their large-cap value brethren (data are through Thursday). Tech funds, meanwhile, are up an astounding 14% in 2009. Small-cap funds, however, have yet to turn in a similarly momentous performance. The average fund is just over a percentage point ahead of the broad market -- not exactly a compelling sign that history will repeat itself. As a result of this lackluster performance, the category has been hotly debated.

Over the last few weeks, we've listened to both sides of the small-cap debate and one thing is clear: No one doubts that this niche will eventually thrive. Instead, it's a matter of when it will be the right time to jump in. With that in mind, we devoted this week's screen to small-cap mutual funds. There are 1,694 small-cap funds in our database. We knocked out more than 1,400 that charged sales loads. We then added in our usual performance and fee criteria. And since we think experience counts when sizing up risky small caps, we also searched for managers who had been in place for at least five years. We were left with the 11 funds listed in the table below.

Investors traditionally equate the stock market's tiniest firms with those run by smart entrepreneurs looking to be the next Bill Gates. But in a downturn, when market caps have taken a big hit, what qualifies as a small-cap stock looks much different. We usually define small caps as companies with market capitalizations under $2 billion. With that as a guide, General Motors (GM), insurance heavyweight Genworth Financial (GNW) and United Airlines' parent UAL (UAUA) would qualify. Not exactly a group of budding Microsoft (MSFT) circa 1986 (when the company went public).

But that's one of the reasons small-cap stocks do well in post-bear markets. As credit and capital ease, small-cap firms gain access to funds that can help them grow or get back on track. Reorganized or emerging firms all of a sudden appear as solid M&A targets by opportunistic suitors. And when companies exceed low earnings expectations, they also regain favor with investors who, thinking that the worst is behind them, become more comfortable buying riskier stocks.

After the bear market earlier this decade, small-cap stocks enjoyed a solid run. IShares Russell 2000 (IWM), an exchange-traded fund that mirrors the Russell 2000 index of small-cap stocks, lost 20.3% in 2002, according to Morningstar, but then gained 47.6%, 18%, 4.5% and 18.3% over the next four years, respectively.

Judith Lau, president of money-management firm Lau Associates in Wilmington, Del., isn't so sure small caps are ready to repeat that performance quite yet. Even though the category has shown signs of breaking out during the broad market rally that's occurred since the March 9 market low, Lau isn't ready to jump in. "[We] think it may be a bear market rally," she says.

Lori Calvasina, Citigroup (C) small- and midcap strategist, is a bit more bullish. "The 29% small cap gain since March 9 has been swift, but is short of the average 12-month bounce off market bottoms in recent recessions," she wrote in a report last week. "It is time to move back to smaller stocks." Lately, she's been making the case for small-cap tech, noting the group's earnings momentum and possible M&A activity.

Essentially the only thing separating Lau from Calvasina is timing. Regardless of whether you are ready to increase your exposure to small caps or plan to take a wait-and-see approach, we think these funds are worth checking out. The Royce funds have a tried and true history of investing in the space. Meanwhile, FBR Focus (FBRVX) can invest up and down the market cap spectrum, but tends to stay closer to the small-cap and midcap space and performs quite well there. It also carries Morningstar's stamp of approval. "We remain confident FBR Focus can deliver," said analyst Ryan Leggio in a recent write-up.

The Criteria: The funds on the table are categorized by Lipper as small-cap funds. They are open to new money, require a minimum investment under $5,000 and charge less than a 1.5% annual expense ratio. Their performance track records put them in the top 20% of the peer group during the trailing three- and five-year time periods. They also have managers who have been in place for over five years. Finally, we did not include load funds.

Recipe

• Fund Type = Small Caps
• Annualized 3-Year Return (%) = Display Only
• Rank in Classification (%) (3 year performance) <= 20
• Annualized 5-Year Return (%) = Display Only
• Rank in Classification (%) (5 year performance) <= 20
• Year-to-Date Return (%) > = -3.46
• Expense Ratio <= 1.5%
• Load Fund (type) = No Load
• Minimum Initial Investment <= $5,000
• Open to New Investors = Yes
• Total Net Assets ($ millions) >= 50
• Manager's Tenure >= 5