The last two weeks have certainly been historic ones. Some of the country's biggest financial entities have spiraled into bankruptcy, resorted to partnering with a competitor to keep their doors open or turned to the federal government for much-needed capital.

Investors have watched as the calamities surrounding the financial-services sector have spread to every nook and cranny of the stock market. Indeed, the Dow Jones Industrial Average had dropped over 600 points since the announcement of the rescue plan for Freddie Mac (FRE) and Fannie Mae (FNM) two weeks ago. But it has come roaring back over the past 48 hours on news of more government intervention. The Dow remains down 16% for 2008 through Sept. 18.

When the market is swinging wildly like this it pays to keep a close eye on your investments, especially if you own what we call "focused" mutual funds. This week the SmartMoney.com fund screen turns the spotlight on these offerings, which can be some of the riskiest (and rewarding) on the market. Focused funds feature portfolios with fewer than 50 stocks vs. two, three or four times that amount for diversified funds. So when their managers get it wrong on a stock -- and many have this year -- it can be particularly painful to shareholders.

We started with a universe of 5,699 funds and share classes that own fewer than 50 stocks. We knocked out 3,505 of them because they charged sales loads. We added in our usual performance and fee criteria and added an additional requirement: manager tenure. Since investors are essentially betting on the jockey when they buy a focused fund, we wanted the ones who had been around the track a few times. Twenty funds ultimately made the table below.

Focused funds typically occupy a small but unique part of an investing portfolio. Most advisors will tell you that these funds make perfect complements to index funds, at least in small doses. And if they perform correctly they could give your portfolio some outsized returns that exceed those of the broad market.

"These funds provide the octane in your portfolio," says Brett D'Arcy, director of investment and research at CBIZ Financial Solutions in San Diego.

However, by their nature focused funds take on more risk than the other funds in your portfolio. Because they only invest in a few dozen stocks, the individual weightings of those stocks can be 5%, 10% or more of the entire portfolio. A diversified fund usually keeps its weightings at a percentage point for each stock. During bull runs it means a good stock pick can catapult the fund's returns. However, during downturns it can have the opposite effect.

Indeed, this year has been particularly tough for some well-respected focused funds. Clipper Fund (CFIMX) owned both Merrill Lynch (MER) and AIG (AIG) . Merrill Lynch was swallowed up by Bank of America (BAC) . The federal government now owns 80% of AIG after it stepped in Tuesday with an $85 billion rescue package. Clipper is down 30% in 2008 through Thursday night.

If you're looking for a well-run focused fund, we would point you to three possible contenders for a space in your portfolio. Ken Heebner's CGM funds, including CGM Mutual (LOMMX) have been top performers during the recent downturn. Fairholme (FAIRX) has been run by Bruce Berkowitz since 1999. He and three colleagues use a Warren Buffett-type approach to picking stocks, including looking for good management teams and strong balance sheets. The fund's big cash position has helped it stem loses this year to a 4.6% deficit, one of the best tallies in Morningstar's large blend category. We would also suggest looking at Mairs & Power Growth (MPGFX) . This fund primarily invests in companies located near its headquarters in St. Paul, Minn. It had a rough 2006 and 2007 but has regained its old form this year.

That brings us to a key point about focused funds. Just remember you have to treat these funds like other long-term holdings in your portfolio. So when a focused fund has a bad clip, you don't want to make a knee-jerk reaction and sell it. If you can't stomach that up and down performance it's best to just avoid them completely.

The criteria: The funds on the table below own fewer than 50 stocks. They are open to new money, require a minimum investment under $5,000 and charge an annual expense ratio of less than 1.5%. In addition, their lead managers have been in place for at least five years and their performance track records puts them in the top 25% of their categories over the trailing three- and five-year periods. We didn't include load funds. We also knocked out of contention funds-of-funds, asset-allocation and target-date offerings and other niche categories.