Two sectors that have performed well over the past year and are poised to continue moving upward in a recovering economy are technology and consumer discretionary, according to Benzinga.com. Additionally, the transportation sector seems to have some appeal because transportation is required to move finished goods.

Technology is prospering because consumers have an insatiable desire for innovation, while the latest technology gives businesses a much-needed competitive advantage. (More on technology).  The sector can be accessed through the iShares Dow Jones U.S. Technology Sector Index Fund (NYSE Arca: IYW), which is up 54.6% year-to-date.

The consumer discretionary sector has been pummeled by recent economic conditions as consumers remain loath to spend. As the recovery continues and confidence is regained, though, it’s wise to keep in mind that the most beaten-down areas offer the greatest potential for growth. (Why donsumer discretionary is hot).  It can be accessed through the Vanguard Consumer Discretionary ETF (VCR), which is up 39.6% year-to-date.

On the same token, since this is expected to be a soft recovery, it’s worth keeping an eye on the consumer staples sector, as well. The unemployment rate is at a 26-year high, which means that there are still millions of people feeling the pinch. When they shop, they’re looking for what they need, not what they want. PowerShares Dynamic Consumer Staples (NYSEArca: PSL) is up 17.5% year-to-date.

The transportation sector has been hit hard and will naturally improve as the economy does; even Warren Buffett seems good value in the sector, based on his recent acquisition of Burlington Northern (NYSE: BNI). (Where transportation goes from here).  It can be accessed through the iShares Dow Jones U.S. Transportation (IYT) which is up 13.4% year-to-date. For more stories on the transportation sector, visit our transportation category.

The shipping sector is another indicator of how the world is recovering. Once global demand resumes, shipping prices should recover and an increase in available ships will be moot. (What challenges are facing the shipping industry?) As consumers begin to spend more and nations struggle to rebuild, this sector will ultimately reflect a shift in tides. Claymore/Delta Global Shipping (NYSEArca: SEA), up 29.1% year-to-date.

Last, but certainly not least, consider emerging markets. While the United States recovery lags, that doesn’t mean there are no opportunities. Emerging markets have outperformed handily this year – iShares MSCI Emerging Markets (NYSEArca: EEM) is up 61.6% year-to-date, vs. the S&P 500, which is up 20.4%.

For full disclosure, Tom Lydon’s clients own shares of EEM.

Kevin Grewal contributed to this article.

iShares has filed with the Securities and Exchange Commission (SEC) to launch the following ETFs:

• iShares Emerging Markets Financial Sector ETF
• iShares Emerging Markets Materials Sector Index Fund

A large inflow of assets into emerging markets signals that the timing could be right for the launch of these funds. Last month, about $1.76 billion in net inflows was seen by iShares MSCI Emerging Markets (NYSEArca: EEM). Likewise, Vanguard Emerging Markets (NYSEArca:VWO) saw $2.2 billion in net inflows in the same period.

There are three levels of concentration as far as emerging markets are concerned. The first level of concentration to consider is location. Broad emerging-markets funds such as EEM and VWO diversify assets over a handful of emerging markets, says Don Dion for The Street. It is necessary to make sure there is not a lot of cross-exposure taking place.

Secondly, beware of over-concentrated holdings. Ideally, the top holding should not make up more than 10% of holdings. If you are looking to purchase a fund with larger concentrations, make sure to monitor those holdings in particular. A large component can have a large impact on your portfolio. (Why stop losses matter).

Last, make sure to check out the sector components. If an over-allocation to financials or energy is selected, then the fund may become too volatile and diversification is not going to be as promising.

iShares’ filing is just the latest in growing interest in emerging markets. Both Global X (Check out their new ETFs) and Emerging Global Shares (See their latest offerings) have added to their line-up of emerging market offerings. PowerShares has the PowerShares Emerging Markets Infrastructure (NYSEArca: PXR), as well. It’s up 86.3% year-to-date.

Now that the many broader developing regions and countries have been targeted with ETFs, it seems providers are increasingly turning to sectors in these markets to give investors more options for their portfolios. As with any emerging market fund, follow the trend lines in order to protect yourself. (How to follow trends).

For more stories about new ETFs, visit our New ETF category.

Many executive pension fund managers worldwide are pouring assets into emerging markets in an effort to gain more bang for the buck. As the recession has wound down, emerging markets generally have fared better than developed ones, making them an appealing destination for cash, reports Thoa Hua for Pensions & Investments.

Recently, long-held assumptions about emerging markets have been challenged, including their level of volatility, liquidity limits and their overall ability to survive an economic crisis. (Why ETFs are ideal as emerging market plays).

To the surprise of many, it was the emerging markets that recovered before the developed world even begin to dream of a turnaround. Gary Gordon for ETF Expert notes that while it’s true that emerging markets were among the first to fall, they were also the first to recover. (Six things you’re missing by not being global).

In the long-term, many expect that emerging markets will only continue to become major contributors to the health of the global economy. They already account for one-third of the global GDP and 10% of the world’s market capitalization. To ignore them would be to lead a gigantic hole in your portfolio.

Although emerging markets are recovering handsomely and are well ahead of developed market ETFs, it’s still wise to proceed with caution. Protect yourself by using an exit strategy, which you can read about here.

For more stories about emerging markets, visit our emerging markets category.

• iShares MSCI Emerging Markets (NYSEArca: EEM): up 54.1% year-to-date

• Vanguard Emerging Markets (NYSEArca:VWO): up 61% year-to-date

For full disclosure, Tom Lydon’s clients own shares of EEM.

The Central Bank will keep rates unchanged, but the widening yield spreads between mortgage-backed securities (MBS) and federal agency debt against Treasuries may be an essential factor in determining the Fed’s stance on the direction of interest rates, reports Julie Haviv for Reuters. The Fed will buy $1.25 trillion allotted for its MBS program by the end of the first quarter of 2010. (ETFs to shelter against a weak dollar).

Purchase programs have inflated some securities to the point that investors are beginning to turn to the risk/reward of alternative spread products like corporate bonds. For instance, the yield spread on the 30-year Fannie Mae 4.5% current coupon stood at 1.47% over the 5- and 10-year Treasury blend, says Arthur Frank, director and head of MBS research at Deutsche Bank Securities.

The Fed’s decision ultimately could keep the dollar weak for the time being. To capitalize on continued weakness in our currency, consider some of the following ETFs:

• PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN). UDN is up 7.2% year-to-date. This ETF seeks to reflect the performance of the short side of U.S. dollar – basically, the dollar goes down the fund goes up. (More on UDN and a weaker dollar).

• CurrencyShares Euro Trust (NYSEArca: FXE). FXE is up 5.4% year-to-date. A straight forex play on the appreciating euro. As the dollar depreciates against the euro, the euro gains in strength. FXE tries to reflect those gains. (More on FXE and the euro)

• iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM). EEM is up 54.1 % year-to-date. By holding non-dollar-denominated assets, such as emerging market equities, investors  can hedge against weakness. Emerging market investments get the benefit of the “dollar kicker” since assets denominated in foreign currencies are eventually converted back to weaker U.S. dollars. (More on EEM and emerging markets).

• iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG). GSG is up 12.5% for the year. This fund, like other commodity funds, can be a weak dollar hedge. GSG owns futures for 24 different commodities. (More on GSG and commodities).

• SPDR Gold Shares (NYSEArca: GLD). GLD is up 23.1% year-to-date. Gold is another weak dollar hedge because it’s considered a store of value. The current high supply of the dollar in the economy can result in high inflation and many investors have turned to gold as a way to protect against inflation. (More on GLD and gold).

For full disclosure, Tom Lydon’s clients own shares of EEM and GLD.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

Many electronic makers have come to the market with aggressive cost-cutting plans and incentive to gain back consumer dollars, as the global outlook for the market shows signs of improvement.

• Although Playstation maker Sony posted fourth-quarter losses, the company’s latest results beat analysts’ forecasts by a wide margin, reports Hiroko Tabuchi for The New York Times.

• Samsung Electronic is still the ruler; the performance of other companies couldn’t match the world’s largest maker of televisions. Samsung said profits in the most recent quarter had tripled to a record $3.14 billion as it capitalized on investment in new panel technologies and marketing. It also got a boost from a weak won, which gave it the ability to undercut Sony’s prices.

• Panasonic notched its first profit in a year as sales of DVD recorders and household appliances showed some recovery. It’s now betting on batteries for hybrid and electric cars by merging with Sanyo.

Who can grab the most market share by cost cutting and appealing to consumers?

For more stories about consumer discretionary, visit our consumer discretionary category.

• PowerShares FTSE RAFI Japan (NYSEArca: PJO): down 1.1%; holds 2.8% of Sony

• SPDR S&P International Cons Disc Sector (NYSEArca:IPD): up 55% year-to-date; holds 2.2% Sony

• iShares S&P Global Technology (NYSEArca: IXN): up 38.2% year-to-date; holds 4.2% Samsung

• iShares MSCI Emerging Markets Index (NYSEArca: EEM): up 64.5% year-to-date; holds4.3% Samsung

• iShares MSCI South Korea (NYSEArca: EWY): up 63.4% year-to-date; Samsung, 19.1%

• WisdomTree International Technology Sector Fund (NYSEArca: DBT): up 18.9% year-to-date; Panasonic is 6.2%

Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy. In the near-term, growth rates in developed nations are expected to be lackluster, and much less robust than those in the developing world’s. (What you’re missing when you’re not globally invested).

Countries that are resource rich and developing are stockpiling cash and shoring up their balance sheets for a strong recovery and a growth spurt unlike any seen before. Earnings and  economic activity have been revived. Morgan Stanley feels that earnings in emerging markets have bottomed in the third quarter and they’re now set to climb again. (Why frontier markets could be even bigger).

For more stores about emerging markets, visit our emerging markets category.

There are a variety of ways to play emerging markets. There are broad funds, such as iShares MSCI Emerging Markets (NYSEArca: EEM), Vanguard Emerging Markets (NYSEArca: VWO) and iShares MSCI EAFE Index (NYSEArca: EFA).

There are funds that focus on regions, such as Claymore/BNY Mellon BRIC (NYSEArca: EEB) and BLDRSAsia 50 ADR Index (Nasdaq: ADRA).

Finally, there are single-country funds, such as iShares MSCI Brazil (NYSEArca: EWZ) and Market Vectors Vietnam (NYSEArca: VNM).

Keep in mind that the narrower you get in your exposure to emerging and frontier markets, the higher your risk will be. Be sure to have an entry and exit strategy before you invest. (How to follow trends).

According to John Spence for The Wall Street Journal, industrywide, ETF assets have topped $750 billion  with year-to-date inflows of nearly $56.3 billion.  A large portion of those assets are heading toward ETFs that track the international markets, bonds and commodities. All three classes offer protection from either inflation, a falling dollar or both. (For more stories on commodities ETFs, visit our commodity ETF category.)

Emerging Markets. Emerging markets are the talk of the town. One of the benefits of investing in emerging markets, aside from diversification, is the “dollar kicker” when assets denominated in foreign currencies are converted back to U.S. dollars. Investors get the benefit of differences between two currencies. (Watch Tom on CNBC to learn more about investing overseas).

One of the top selling international ETFs is the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) which has nearly $37 billion in assets and is up 65.4 % year-to-date.

Also consider more narrowly focused emerging market ETFs, too, especially if your risk tolerance is higher. Our Ultimate Guide to the BRIC ETFs outlines the options available to investors when it comes to Brazil, Russia, India and China, and more ideas can be found in our emerging markets category.

Bond ETFs. In the bond arena, the iShares Barclays TIPS Bond Fund (NYSEArca: TIP) has been popular because it offers investors protection against inflation.  The ETF has $16.9 billion in assets and is up 8.6% year-to-date. (All of your TIPS questions are answered here).

PIMCO also has some newly launched TIPS funds: PIMCO 15+ Yr. US TIPS Index Fund (NYSEArca:LTPZ) and PIMCO Broad US TIPS Index Fund (NYSEArca: TIPZ). (Three ways TIPS help hedge inflation).

Commodities. As for commodities ETFs, many have been drawing assets and attention.  The SPDR Gold Shares (NYSEArca: GLD) boasts $37.5 billion in assets and is up 19.5% year-to-date.  Commodities ETFs have really felt the heat this year as the Commodity Futures Trading Commission (CFTC) has stepped up regulation and is expected to impose position limits on certain ETFs soon. (Is the gold rally overheated?)

As with global ETFs, there are commodity ETFs that go from broad to narrow. Learn how to pick your spots here.

The Dollar’s Short Side. PowerShares offers two ETFs that seek to reflect the performance of the U.S. dollar long or short. As the dollar heads lower, investors might find the PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN) appealing. It’s up 8.3% year-to-date.

Dollar hedging can also be done with ETFs that track other currencies. Our currency special report has a list of the available ones out there, as well as explanations of how they operate.

As with any sector or asset class, always have a plan in place for both entry and exit. No trend goes on indefinitely, so by having a strategy and being prepared to act when necessary, you can give yourself the opportunity to be in for a potential long-term uptrend and out in time to protect yourself on the downside. (How to follow trends).

Kevin Grewal contributed to this article.

Global economies are already hinting at signs of recovery, and this will ultimately translate into better company profits and better share prices, comments Bruce Cameron for Personal Finance.

Cameron suggests looking to investments abroad because the potentially higher inflation rates in the United States as compared to other countries will cause the dollar to further depreciate. Thus, overseas investments would further benefit from the strength of foreign currencies.

Through the use of ETFs, investors are able to track indexes composed of various securities or commodities. ETFs are seen as a low-cost means of investing in foreign markets that would otherwise be inaccessible to the average investor. It is also prudent to diversify foreign holdings to reduce risk in one’s portfolio.

When it comes to gaining exposure in overseas markets, there are ETFs that range from very broad (Vanguard FTSE All-World ex-US (NYSEArca: VEU) to more specific (iShares MSCI Italy (NYSEArca: EWI).

Potential overseas investors should note that emerging markets are considered riskier than those of developed countries. Follow the trend lines, and you would not be amiss to have an exit strategy in place. For more information on trends, visit our trend following category.

• iShares MSCI Emerging Markets (NYSEArca: EEM): up 60.8% year-to-date

• SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): up 25.6% year-to-date

Max Chen contributed to this article.

In the emerging markets ETF industry, the iShares MSCI Emerging Markets Index (NYSEArca: EEM) is losing ground to its low-cost competitor, the Vanguard Emerging Markets Stock (NYSEArca: VWO), writes Ian Salisbury for The Wall Street Journal. The expense ratio for EEM is 0.72%, whereas VWO is 0.27%.

Since the start of the year, a new infusion of money found its way into emerging market ETFs and Vanguard’s fund took in $5 billion compared to the more established Barclays iShares‘ $2 billion.

Barclays currently has no plans to reduce expense fees and says short-term investors will favor EEM because of the ETF’s lower trading costs. (Find out what to look for when choosing an ETF here).

The iShares ETF has kept fees high because developing country stocks are difficult to come by and the ETF’s hefty trading volume attracts large investors.

• iShares MSCI Emerging Markets Index (NYSEArca: EEM): up 60.8% year-to-date

• Vanguard Emerging Markets Stock ETF (NYSEArca: VWO): up 69% year-to-date

For more information on emerging markets, visit our emerging market category.

For full disclosure, Tom Lydon’s clients own shares of VWO and EEM.

Max Chen contributed to this article.

While investors aren’t heading for the exits, talk of a potential correction persists. But if you’re in the markets now, you have participated in the rally. (And if you’re not in, read about rebuilding your portfolio here). And like most investors, you probably want to protect those gains, not lose them.

Jeff Cox for CNBC has seven ideas on how to keep your gains safe, and we’ve thrown in some of our own, as well:

1. Emerging/Overseas Markets: Investors are moving away from a solely domestic portfolio, and moving assets overseas to cultivate diversity and keep exposure to foreign markets. By remaining quick and conservative, the markets such as China or Russia can help spread out the risk. Read about their economies here).

• iShares MSCI Emerging Markets (NYSEArca: EEM)

2. Energy: This sector remains to be a mainstay within a portfolio, as crude prices will stay low in the near term but could go significantly higher when supply becomes an issue again. Find out what may happen with oil prices here).

• United States Oil (NYSEArca: USO)

3. Choose ETFs: While some market pros now are cautioning against playing the entire market and suggest choosing single stocks instead, consider ETFs. Choosing a winning stock in a sector can be a daunting challenge, while an ETF can give you instant exposure while spreading out the risk.

4. Play Defense: Security can be found in names that traditionally provide security while the market looks for further direction. Consider what’s happening in consumer staples: consumers are staying at home, cooking more meals in and buying those old familiar name brands.

5. Gold: Gold prices have risen along with the stock market and economic indicators, indicating that investors want some downside protection should the rally fade. This has pushed the price of gold to new records. Can the rally go on? Read about it here.

• SPDR Gold Shares (NYSEArca: GLD)

6. Homebuilders: This beaten-down sector is poised to go higher, however, supply has a lot to do with it. While there have been a slew of factors cited—leveling in prices, low mortgage rates, government intervention—supply and demand will be the key in a true recovery for this sector.

• SPDR Homebuilders (NYSEArca: XHB)

7. Technology: Consumer electronics was the 11th strongest sector in the third quarter, up 44%. Some believe that this sector will continue to move higher.

• Vanguard Information Technology (NYSEArca:VGT)

8. Have an exit strategy. We use the 200-day moving average as a guide for when to get in and when to be out of the markets. For more ideas about trend following and creating a defensive strategy, check out the The ETF Trend Following Playbook, on shelves now.

For more stories about portfolio protection, visit our trend following category.