The August jobs report did not signal a return to a brisk economic recovery, but it did include a few positive data points that some say could mean brighter days ahead for funds that hold smaller companies.

Investors willing to look past the disappointing uptick in the unemployment rate could find pockets of job growth in the report. Private-sector companies added 67,000 jobs, following an upwardly revised gain of 107,000 in July. Since its most recent low in December 2009, the private-sector has added 763,000 new positions.

Industries in which small-cap funds are heavily invested were big contributors to private-sector job growth last month. Health-care companies, for example, added 28,000 jobs in August. The industry has added an average of 20,000 jobs per month so far in 2010. Construction employment was up 19,000, but that included the return to payrolls of 10,000 workers who were on strike in July. Within professional and business services, employment in temporary help services grew by 17,000.

A sustained turnaround in hiring would affect smaller businesses the most, says David Chaoupnik, head of equities at First America. Typically in a downturn, bigger companies pare down more, but this time Chaoupnik says smaller companies were more aggressive in making cuts. They slashed inventories, capital expenditures and payrolls to protect cash flow and their balance sheets because they didn t know what would happen, he says.

Many smaller firms have been steadfast in not hiring back because of the depth of the crisis and uncertainty around policy, including health care and tax law, Chaoupnik says.

So, although the August report suggested a small pick-up in private-sector hiring, small businesses could still have much more room to grow after the November elections.

Who s betting on smaller business? In this week s Fund Screen, SmartMoney looked at top performing small-cap growth funds. We narrowed the field to those in the top 20% of their peer group for the year-to-date and the trailing three- and five-year periods; received at least a four-star rating from Morningstar; and kept their annual expenses nominal. We were left with three.

Among them was the Marshall Small-Cap Growth Investor (MRSCX) . Managers Ken Salmon and Patrick Gundlach set up the fund to take advantage of what they see as overestimates in the magnitude and duration of the corporate revenue slump, according to Morningstar analyst Courtney Goethals Dobrow. Unlike peers who require absolute growth levels, they don't have revenue or earnings-growth thresholds, she writes. Rather, they look at the direction of growth rates.

The fund is allocated more than 15% in health care, the most of any sector. It also maintains allocations of more than 10% in energy, telecommunications and hardware. The fund s largest holding, Energy XXI (EXXI) has returned 134% so far this year. Two other holdings, Ebix (EBIX) and McMoRan Exploration (MRR), returned 15% and 81%, respectively.

Another fund that came up on the screen, Janus Triton (JATTX), stays diversified across 70 to 100 stocks with market caps between $1 billion and $4 billion and limits position sizes to 3%. Just more than 24% of its holdings are allocated to business services, and it has stakes greater than 10% in software, health care and industrials.

The Criteria: The funds on the table have a minimum investment of $5,000 or less. They're open to new money and charge an annual expense ratio no greater than 1.6%. In addition, their performance track records were in the top 20% year-to-date and over the trailing three- and five-year time periods for their peer group. All have four-star ratings or higher from Morningstar. As usual, we did not include load funds.