Ten ways to rejig your portfolio

Here we highlight 10 areas to sell and what to buy instead:

1. SELL GILTS AND BUY BLUE CHIPS

Investors who have not yet sold holdings in gilts (government debt) are being urged to do so now.

Prices have been falling (and yields rising) amid fears that the government will have to issue more gilts to deal with its mounting debt problems. Yields on 10-year gilts have risen from 3% to 4% over the course of 2009. Nick Gartside, a bond manager at Schroders, suggests yields could increase to 5% by the end of the year.

Bill O'Neill, portfolio strategist at Merrill Lynch Wealth Management, said: "We expect equities to outperform government bonds fuelled by accelerated growth from Asian markets."

Among equities, Kevin Gardiner, head of investment strategy at Barclays Wealth, prefers blue chips to smaller firms.

2. SELL CORPORATE BONDS, BUY INCOME FUNDS

John Chatfeild-Roberts, head of the Jupiter Independent Funds, said the "easy money" has been made from bonds and that returns are now likely to come from income rather than price rises.

"In some cases companies' equities are yielding more than their bonds," he said.

Astra Zeneca's 2017 bond, for example, currently yields 4.14% whereas its shares have a prospective yield of 5.01%. He has reduced exposure to corporate bond funds and instead bought income funds such as the Invesco Perpetual Income fund.

3. SELL RETAILERS, BUY SUPERMARKETS

Advisers are recommending investors to sell cyclical stocks such as retailers, which generally perform well as investors become more confident about recovery. Instead, they should buy "defensives" such as supermarkets, which tend to do well even if growth is anaemic because consumers will always need to buy food. Simon James at investment manager Gore Browne suggests selling non-food retailers such as DSGI, owner of Dixons.

He tips supermarkets such as Tesco instead. It posted better-than-expected results last week and it plans to offer current accounts in Britain this year. (Its shares are up 21% over 12 months).

Jonathan Jackson of Killik suggests taking profits from the cyclical mining sector, which soared 125% last year, and buying drugs stocks instead.

He likes Glaxo Smith Kline, whose shares have been flat over 12 months and is yielding 4.8%, and Astra Zeneca, which is up 7% and yields 4.7%.

4. SELL EMERGING MARKETS, BUY THE US

The emerging market sector is up 67% over the past 12 months but there are signs that the rate of growth may stall. China last week raised the amount of money banks must hold in reserve as a way of restraining economic growth.

The investment banking arm of HSBC prefers the US and even the UK to emerging markets.

Robert Parkes, a strategist at HSBC, said: "Much of the better news on growth is already priced in, particularly in emerging markets. We see more room for positive surprises in the US - the consensus's least favourite market - the UK, and in less loved emerging markets such as Mexico and Taiwan."

5. SELL METALS AND GOLD, BUY AGRICULTURE

Industrial metals surged in 2009 on the back of demand from rapidly industrialising emerging markets with copper up 139%, zinc up 105% and palladium 100% over 12 months.

Meanwhile, gold rose 26% as investors sought an alternative to the dollar. However, with the dollar expected to recover this year (see below), James at Gore Browne expects the value of gold to fall. He has recently sold his holdings in the Black Rock Gold and General Fund.

He suggests instead going for "oversold" agricultural commodities such as wheat and corn (down 23% and 10% respectively) through a fund such as Eclectica Agriculture.

6. SELL BANKS AND PROPERTY FIRMS, BUY TOBACCO

Banks still face the prospect of writedowns on commercial property loans, according to James at Gore Browne. "If businesses continue to fail in 2010, banks may face further financial problems as they are left with assets worth less than the loans they issued," he said.

He also suggests selling commercial property firms such as British Land and Land Securities, which were up 60% and 115% respectively in 2009.

He favours buying cash-rich firms instead such as British American Tobacco and Imperial Tobacco.

7. SELL OIL CONSUMERS, BUY OIL PRODUCERS

Oil prices rose last year and analysts predict a steady increase from its current level of about $80 per barrel.

One of the biggest losers will be British Airways, said Killik, as margins are heavily dependant on the crude price.

By contrast, BG Group is a likely beneficiary of rising oil prices. It has outperformed bigger rivals such as BP and Shell, growing 23% over 12 months compared with 21% for BP and 8% for Shell.

8. SELL GREEN, BUY NUCLEAR

The government has approved the building of 10 power stations and similar decisions on construction are expected in Germany, Japan, Italy and America, according to Max King at Investec.

Simon Webber of the Schroders Climate Change fund likes firms such as Areva - up 2% over 12 months - which is involved in the production of nuclear plants, as well as the uranium miner Cameco - up 41% over 12 months.

He believes some green stocks are overvalued. "The price of solar panels has collapsed because of oversupply," he said.

9. SELL THE EURO, BUY THE DOLLAR

Investors sold the dollar in 2009, with the currency falling 10% over the year. With the prospect of improved growth in the US, however, the greenback has bounced back by 3.5% since the start of December 2009.

By contrast, the euro is increasingly considered an overvalued currency, with the French finance minister saying as much this month.

10. SELL DEFENCE, BUY INFRASTRUCTURE

With Britain's £178 billion deficit weighing on both the Tories and Labour, one target for a budget cut is defence spending, bringing the likes of BAE Systems into the line of fire. The stock is down 4% over 12 months.

By contrast, infrastructure firms such as Balfour Beatty are more likely to avoid cuts. It has recently won a five-year contract, worth £600m, with the water company United Utilities, to upgrade part of Britain's ageing pipes network.

James likes infrastructure investment trusts including 3i Infrastructure which is up 15.6% over one year, and HSBC Infrastructure, up 3.3%.

HOW EXACTLY DO YOU TAKE PROFITS?

Before you can rebalance your portfolio, you will need to sell assets you no longer want to hold. Where your investments have performed well, this will inevitably mean realising gains and you may be subject to capital gains tax (CGT) at 18% on any gains above the 2009-10 threshold of £10,100.

It is, however, possible to offset any gains against losses you have made and to carry forward any losses from previous years' investments.

For example, if you made gains totalling £25,000 in this tax year, you can keep £10,100 of this before you start to pay tax. If you also made £10,000-worth of losses on other investments, your total taxable gain is just £4,900. At 18%, your liability would be £882.

Losses can be carried forward indefinitely to offset against future gains, although the loss must be registered within five years.

Another reason to lock in profits is the prospect of a new government increasing CGT to help tackle Britain's deficit problems.

Adrian Lowcock, senior adviser at Bestinvest, the independent financial adviser, said: "It is not a case of whether taxes will rise but a matter of when and by how much. The rate of CGT is likely to rise from 18%, so it would be better to pay the tax now and avoid a bigger bill later."

If you have not used up your Isa allowance this year you may also consider selling shares and then buying them back within your Isa. You could also buy the shares for your self-invested personal pension (Sipp). This manoeuvre is often referred to as "bed-and-Isa" or "bed-and-Sipp".

WHEN it comes to selecting new investments, a fund supermarket offering access to a wide range of investment funds and stocks within one package can come in useful.

Such services are offered by Hargreaves Lansdown, Barclays Stockbrokers and Bestinvest, discount brokers such as Chelsea Financial Services, or fund supermarkets such as Alliance Trust or Fidelity Funds Network.

You can transfer your portfolio to a fund supermarket without any costs in most cases, although you will be charged for each change in allocation within your portfolio.

Hargreaves Lansdown, for example, will charge 1% per stock switch over the phone with a minimum cost of £15 and maximum of £50. There is no charge if you switch between funds. Chelsea, on the other hand, typically charges 0.25% per fund switch, although its platform only allows you to invest in funds and not specific stocks.