The economic recovery might be a slow and gradual one, as investors are constantly reminded, but mutual funds posted generally strong gains in the fourth quarter of 2010. Most broad equity fund categories, both domestic and international, posted double-digit gains, reflecting a similarly strong performance from the S&P 500. That index rose 10.8% for the period.

The midterm elections helped boost the market, says John Eckel, founder and president of Pinnacle Investment Management in Simsbury, Conn. "Enough time had gone by that investors were more confident that riskier asset classes would have better performances," he adds.

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