In 2001, when small-capitalization stocks outperformed large caps, investors poured $28 billion into small-cap mutual funds, but the deluge caused a problem for many small-cap fund managers, writes Virginia Kahn in today’s New York Times. As their funds swelled in size, managers found it more difficult to invest profitably in a market of relatively modest size. Many of the most popular funds closed their doors to new investors, writes Kahn.

Last year, though, small-cap stocks performed almost as poorly as the overall market, and since June, investors have generally been pulling money out of the sector. Partly as a result, several of the shuttered small-cap funds have reopened. Those include Fidelity Low-Priced Stock, Buffalo Small Cap, T. Rowe Price New Horizons and Wasatch Core Growth, which has reopened only to existing shareholders.

Even so, moving money into these reopened funds may not be the best approach for investors who believe that the small-cap sector is ready for a rally, some fund analysts say.

Buffalo Small Cap has $721.6 million in assets, while Wasatch Core Growth has $1.04 billion, T. Rowe Price New Horizons has $3.36 billion, and Fidelity Low-Priced Stock has $15.54 billion. Mr. Edwards suggested that investors look for smaller funds.

Jeremy DeGroot, director of mutual fund research at Litman/Gregory Asset Management in Orinda, Calif., said: “The fundamental rule is, past performance is not predictive of future performance. You have to look at the characteristics of the fund now and base your investment decision on that.”

Other analysts, including those at Morningstar, continue to recommend Fidelity Low-Priced Stock, Buffalo Small Cap and Wasatch Core Growth. “These are very impressive offerings,” said Emily Hall, senior mutual fund analyst at Morningstar. “Most of these firms have shown their willingness to close funds before assets get out of control.”

Ms. Hall noted that many small-cap funds closed when their assets approached $1 billion. But Fidelity Low-Priced Stock has defied the conventional wisdom about asset size by posting returns that rank among the top 8 percent of small-cap blend funds for the last one, three and five years.

In many ways, the returns of the funds will depend on how well small stocks perform in general, and there is no consensus on that outlook. Historically, small caps have performed well coming out of recessions because small companies are more likely to be affected by economic cycles. In the 12 months after the eight recessions tracked by the Leuthold Group from 1954 through 1991, small-cap stocks averaged gains of 39%.