Last year was a good year in the markets and a great year for many active portfolio managers. The results were a stark contrast to 2008. In the aftermath of the 2008 stock market massacre, many investors were too shocked to take action. Actively managed mutual funds had taken a beating - indexes didn't fare too well either - and investors didn't know what to do. (Learn which management style best fits your investment goals in The Lowdown On No-Load Mutual Funds.)

Last year's rebound has helped to reenergize investors, and the New Year brings new opportunities and a time to reassess your investments.

Time For a Change?
If your portfolio took a beating in 2008, the first question to ask yourself is "did it rebound in 2009?" If so, was the rebound close to or in excess of the benchmark? While your first reaction may be to expect returns that beat the benchmark, keep in mind that investing is a long-term endeavor, and strategies that outperform the benchmark over a period of ten years are based on averages that may include four years of underperformance and six years of outperformance or some other combination of results that come out ahead over time.

In an extreme example, a manager that trails the benchmark for nine years by 1% and then outperforms by 40% produces an average result that is ahead of the curve. The point here is that a single year does not usually provide enough information on which to base a long-term investment strategy.

If you were happy with 2009's performance results, it's time to look backwards and ask yourself whether or not you were happy with your investment strategy prior to the crash. If that mid-cap fund was appropriate for your portfolio in 2006, is it still appropriate today? If so, it's time to sit back and let the law of averages, dollar-cost averaging and the healing power of time go to work on your behalf.

Of course, even if your manager is doing a great job, the precipitous stock market decline that is still so fresh in our memories may have changed your strategy. Perhaps you need to take a more aggressive stance to make up lost ground. Or maybe you're gun-shy and have decided that you can live with lower returns in exchange for limiting your downside risk.

Either way, choosing the right strategy is likely to have a far greater impact on your portfolio than switching managers. (These key stats will reveal whether your advisor is a league leader or a benchwarmer. Find out more in Does Your Investment Manager Measure Up?)

Don't Change for the Sake of Change
With many portfolios still down from their peaks by double-digits, the urge to "do something" can be overwhelming. It can also be illogical. If the returns in your portfolio were reasonable and you are happy with fund and the strategy, there may be no reason to make a change.

If you decide to make a move, think first. Carefully consider not only where you want to move your money but why also why you want to move it. If you've got a good reason and a sound strategy, by all means make the move.

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