For several years, investors have chased more-speculative and volatile assets, such as small-company stocks, emerging-markets stocks and bonds, as well as gold and other commodities. But now, central banks around the world are signaling that the party's over.

Leading the pack is the U.S. Federal Reserve, which has raised short-term interest rates 17 consecutive times before recently taking a breather. All of the sectors that performed heroically between 2002 and last May were hammered in the recent market correction.

"Investors have gotten paid very well over the last couple of years to own lower-quality and higher-risk assets," says Scott Merritt, a strategist for JPMorgan Asset Management. "That play's over."

How should fund investors confront this risk-averse environment? Simple: Focus on quality. It makes sense to shift some money from small-company funds to large-company funds, especially those rich in dividend payers. Investing globally makes more sense than ever, but we prefer funds that focus on developed markets rather than emerging markets.

In the fixed-income arena, the gap between Treasury-bond yields and those of emerging-markets and domestic high-yield bonds seems awfully thin. So you're better off with short- and medium-term high-grade bond funds. And with yields on virtually risk-free money-market funds starting to hit 5 percent, cash is beginning to look mighty attractive.

If the recent market volatility has left you feeling queasy, it should also spur you to re-examine your current investments — and make sure that they (and you) can withstand further turbulence.

Start by revisiting how well you handle risk. If you break out in a sweat with each market dip, you may need to trim your stock holdings. If you haven't rebalanced your portfolio lately, check your mix to make sure you aren't too heavily invested in any one sector. Don't worry if your allocation has drifted a few percentage points.

"But if you're 10 percent or 20 percent off," says Thomas Belisari, an adviser with Key Financial in West Chester, Pa., "it's time to take a serious look." In that case, trim positions in funds that have had large run-ups and move into areas that haven't done as well.

Revisit the reasons you bought a fund — and determine whether they're still valid. Keep in mind that over time, some funds shift investment focus. For instance, has your small-company fund drifted into midsize-company territory? And don't dump a good fund because it hasn't done as well over the short term.

"I wouldn't be quick to sell unless there's a management change or the fund has continually lagged behind its peers over, say, three and five years," says Belisari.