Sometimes—especially when a bear market awakens from its hibernation—investors begin to feel the urge to take a flier on a higher-risk mutual fund.

Which can be OK. Having a very small portion of your holdings in speculative choices can be acceptable so long as it doesn't involve little Johnny's tuition, next year's retirement expenses, or the bulk of your family nest egg.

Just enter with eyes wide open: Acknowledge inherent risks, study the fund's strategy, steel yourself for volatility, and be willing to lose everything you put in.

Investing intelligently in higher-risk choices in 2010 requires homework.

"A mutual fund's name or description may include the word 'aggressive' or 'concentrated,' but rarely will it say it is a 'high-risk' mutual fund," says Jeff Tjornehoj, senior research analyst with Lipper Inc., in Denver. "That's why an investor must read the fund prospectus carefully."

Risk to some investors means volatility and how much a fund will go up and down in value, yet for others it means the likelihood of losing one's money, he says. Be clear on your own risk definition.

"Rather than look at the label, look at the fund's strategy and how concentrated its portfolio is," says Christine Benz, director of personal finance for Morningstar Inc., in Chicago. "The narrower you slice its universe of stocks, the more aggressive the investment will be because it won't perform well in all market environments."

Simply saying that you want to get more aggressive with your investments is a mistake, Benz warns, because the starting point must be the building of an intelligent asset allocation framework before even thinking about diversifying your risks.

Growth funds willing to pay high prices for fast-growing stocks are commonly considered high-risk. However, aggressive value funds that move quickly to scoop up price-challenged fallen stocks also can have their share of fluctuations.

Consider Aegis Value Fund (AVALX), of Arlington, Va., which has gained 156 percent over the past 12 months and has a 10-year annualized return of 8 percent.

Its circuitous path to those results included a 51 percent nosedive in 2008 and a 91 percent gain in 2009. Many investors would be reaching for the Dramamine.

"I'm not really a 'shoot the moon' kind of a guy, but rather someone who buys things when they are very cheap—well under book value," says the fund's portfolio manager, Scott Barbee, who mostly buys stock in very small companies. "We want investors who will understand that these companies become illiquid because they're smaller-cap, that this is not a cash product, and that investors are well-compensated over time for taking the risk."

While many managers shudder at market sell-offs, Barbee becomes energized about battered stocks to snap up as bargains. Many names in his portfolio would draw blank stares from most investors.

For example, Alliance One International Inc. (AOI), which buys, processes, stores, and sells leaf tobacco to manufacturers of cigarettes and other tobacco products in 90 countries, is a Barbee favorite. The tobacco sourcing industry has consolidated in recent years and supplies stable performance.

Alliance One is up 11 percent this year after gaining 66 percent last year. Its stock was down 42 percent in 2007 and up 81 percent in 2006.

Horsehead Holding Corp. (ZINC), a recycler of zinc dust from steel mini-mills, is another Barbee favorite because it has little debt and considerable cash. After processing zinc dust, Horsehead sells it back to the steel companies and other manufacturers to be used to strengthen steel and in products such as rubber tires, alkaline batteries, and paint.

Shares of Horsehead are up 5 percent this year following a gain of 171 percent last year and a 72 percent drop in 2008. It is obviously not for jumpy investors.

Names in the Aegis Value portfolio that are more familiar to average investors include Bassett Furniture Industries, Audiovox Corp., Dillard's Inc., and Books-A-Million Inc. If you know most of its remaining names, your hobby must be memorizing stock lists. This "no-load" (no sales charge) fund requires a $10,000 minimum initial investment and has an annual expense ratio of 1.20 percent.

Another volatile fund Tjornehoj considers noteworthy is Metzler/Payden European Emerging Markets Fund (MPYMX), with a 12-month return of 104 percent and five-year annualized return of 13 percent. It was up 101 percent last year but down 67 percent in 2008.

One-third of its portfolio is in Russian stocks, with energy, telecommunications, and financials its key industries. Some better-known stocks include Russia's Lukoil Co., Vimpel-Communications, MMC Norilsk Nickel, and Mobile TeleSystems.

It is also one of the few funds that includes stocks from Central and Southeastern Europe and the former Soviet republics. This no-load fund requires a $5,000 minimum initial investment and has an annual expense ratio of 1.50 percent.

"To cut through the clutter, a smart thing to do is look at the 2008 and 2009 performance of a fund," says Morningstar's Benz. "In 2008, risk was very much punished, and in 2009, risk was very much rewarded."

A caveat, however, is that every bear market is somewhat different, and the performance patterns begun in 2008 won't exactly repeat themselves again, Benz warns. Risk always can find countless new ways to take a bite out your portfolio.