Most mutual funds, for better or worse, are made up of large-cap stocks. It's not terribly surprising though since most of the market consists of large-cap names. The S&P 500's cumulative capitalization of around $27 trillion accounts for roughly 80% of the U.S.' total market cap, making it a challenge just finding smaller names to step into. Nevermind the challenge of finding quality, timely analytical coverage of these companies.

The hunt is worth the effort all the same, though. While small-cap stocks tend to be more volatile, they also tend to yield better long-term gains. On average, the S&P 600 SmallCap Index outpaces the large-cap S&P 500 by a couple of percentage points per year. Over time, that small edge can really add up.

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If hunting down and keeping tabs on the market's top small-cap prospects just isn't your thing, however, there's a solution: Let the professionals do it for you. There are dozens of quality mutual funds that specialize in ferreting out the best of the best in this small sliver of the market. Here's a closer look at four of the top picks as 2020 gets rolling.

Picking winners

The Wasatch Ultra Growth Fund (WAMCX 2.26%) did something stunning in 2019. Yes, it outperformed its Russell 2000 benchmark, but that wasn't terribly impressive simply because small caps were fairly poor performers last year. The iShares Russell 2000 Index Fund (IWM -1.38%) trailed the S&P 500's 29% gain with a more modest 24% gain. Rather, the Wasatch Ultra Growth Fund outperformed the market-leading S&P 500 with a 35% advance and has widened its lead in the meantime.

Past performance is no guarantee of future results, of course. In fact, given the inherent volatility of small-cap stocks, it would be surprising if this fund didn't dish out a dramatic lull in the foreseeable future. But with companies like Five Below and Insulet making up the bigger pieces of its investment pool, the volatility is worth it. Five Below is the fun-oriented discount retailer that's not succumbing to Insulet is capitalizing on recent technological leaps that have blurred the lines between insulin pumps and glucose monitors.

Wasatch's lead manager, John Malooly, seems to have his finger on the pulse of what works well in a tricky market environment.

More upside, less downside

The Janus Henderson Small Cap Value Fund (JSCVX 2.43%) is a pleasant surprise within the small-cap fund arena. Managers Justin Tugman (who's been in charge since 2009) and Craig Kempler prioritize defensiveness and specifically seek out value. This sort of specialization often leads to above-average management fees, but in this case, the annual expense ratio of 0.92% is plenty palatable.

Perhaps more importantly, the fund achieves its goal. It outperforms its peers in terms of total return relative to its benchmark -- the Russell 2000 -- but does so without taking the fund's investors through the usual steep ups and downs small-cap stocks tend to make. As the fund family's literature explains, the Janus Henderson Small Cap Value Fund captured 83% of the bullish potential of small-cap value names over the course of the past three years, but only suffered 70% of small-cap value stocks' downside. That's a big part of the reason it's maintained a five-star Morningstar rating for several years now.

Playing it straight, and smart

At the other end of the active/passive management spectrum you'll find the Vanguard Tax-Managed Small-Cap Fund Admiral Shares (VTMSX 2.40%), an index fund intended to mirror the S&P 600 SmallCap Index, but in a highly tax-advantaged way. To curb the tax liability, the fund's managers may elect to forego certain constituents of the S&P 600, hold some trades after they've been removed from the index by Standard & Poor's, or utilize a means other than outright ownership of a small-cap stock to mimic the makeup of the S&P 600.

It matters little. The fund has almost perfectly reflected the performance of its benchmark since its inception in the late '90s. It's been able to accomplish the unusual feat by keeping its expenses down to a rock-bottom 0.09% of the fund's total assets.

It's an index fund, so owners will never outperform its underlying benchmark. But, that's the point. Owners will also never underperform the benchmark either. It's essentially a philosophical bet on the long-term potential of small-cap companies.

Reliable income smoothes out the rough edges

Finally, like every other small-cap fund mentioned here, the Crawford Small Cap Dividend Fund (CDOFX -0.42%) is rated as a five-star fund by Morningstar. It's obviously a different kind of holding though, in that it's dividend-minded.

Don't read too much into that nuance. While managers John Crawford and Boris Kuzmin seek out small-cap stocks with a history of earnings and dividend growth, the bulk of the young fund's strong performance still comes from capital appreciation. Its biggest positions presently include auto service chain Monro, footwear company Wolverine World Wide, and water infrastructure outfit Mueller Water Products. They're all fine companies that pay shareholders a little bit of quarterly income, but their primary goal is revenue and profit growth.

Nevertheless, there's an upside to leaning toward companies that at least try to offer shareholders a bit of balance. Like the Janus Henderson Small Cap Value Fund, the Crawford Small Cap Dividend Fund achieves above-average returns but imposes below-average volatility on investors. For perspective, the fund has averaged an annual return of 12.2% since its inception, versus an average annual gain of 10.5% for the Russell 2000.