Small caps are a key ingredient in any well-diversified portfolio, not least because they have historically outperformed the giants in market rebounds.
Royce Pennsylvania Mutual, which boasts 8% 10-year annualized returns (vs. 3% for the Russell 2000 index), is a good way to gain exposure to this universe.
Last fall's brutal drops did create some opportunities, says small-cap investing guru Chuck Royce: "We used the decline to add better companies."
One ETF alternative is the Vanguard Small-Cap, which is designed to track the broad MSCI U.S. Small Cap 1750 index.
NEXT: Dodge & Cox International Stock