Investors with high-risk appetite and interest in value investing may consider small-cap value mutual funds to gain exposure to stocks that are available at a discounted price. While small-cap stocks are expected to have a higher growth potential than large- and mid-cap ones, value investing has always been popular among investors. After all, who doesn’t want to find stocks that have low PEs, solid outlooks and decent dividends?

Meanwhile, small-cap funds generally invest in companies having a market cap lower than $2 billion. These funds are expected to provide diversification across sectors and companies. Separately, value stocks are those that tend to trade at a price lower than their fundamentals (i.e. earnings, book value and debt-equity). Though it is a common practice to invest in value funds for income or yield, not all value funds solely comprise companies that primarily use their earnings to pay out dividends.

Below we share with you three top-rated, small-cap value mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap value mutual funds, investors can click here to see the complete list of small-cap value funds .

T. Rowe Price Small-Cap Value (PRSVX - MF report) invests the majority of its assets in companies with market capitalizations within range of the Russell 2000 Index. PRSVX may also invest in securities of companies located in foreign lands. Further, PRSVX may choose to sell its securities for reasons such as to restrict losses and reallocate assets in other securities with higher prospects. The T. Rowe Price Small-Cap Value fund has a three-year annualized return of 5.5%.

J. David Wagner is the fund manager of PRSVX since 2014.

Queens Road Small Cap Value (QRSVX - MF report) seeks long-term growth of capital. QRSVX invests generally in securities of small-cap companies located in the U.S. QRSVX seeks to provide capital appreciation by investing the majority of its assets in equity securities of companies. The Queens Road Small Cap Value fund has a three-year annualized return of 8.7%.

QRSVX has an expense ratio of 1.24%, lower than the category average of 1.33%.

CRM Small Cap Value Investor (CRMSX - MF report) invests a large chunk of its assets in equity securities of small-cap companies that are believed to be undervalued. CRMSX invests in securities of companies having market capitalization similar to those listed in the Russell 2000 Value Index. CRMSX invests in companies throughout the globe but traded in the US. The CRM Small Cap Value Investor fund has a three-year annualized return of 7.2%.

As of December 2015, CRMSX held 63 issues, with 2.85% of its total assets invested in Conmed Corp.