ETFs Poised for a Possible 'Pop'

To get into high-yield bond ETFs, investors might find it worth their while to check out the SPDR Lehman High Yield Bond ETF(JNK Quote), the iShares iBoxx High Yield Corporate Bond Fund(HYG Quote) or the PowerShares High Yield Corporate Bond Fund(PHB Quote).

And for REIT ETFs there is the Vanguard REIT Index ETF(VNQ Quote) and the DJ Wilshire REIT ETF(RWR Quote), which both have dividend yields of approximately 5%.

Greg Dahlman, senior vice president and portfolio manager for Dana Investment Advisors, is focusing on sectors that have the potential to outperform their earnings estimates.

"The big story is where the estimates are going," he said. "If you underpromise and overdeliver, your stock is going to be rewarded. Being in sectors and stocks that don't revise downwards and don't surprise to the downside is key."

Although bullish conditions are generally welcomed by investors, there are always going to be sectors that will fall victim to underperformance. Avoiding these areas is vital to building a winning portfolio.

"You want to keep in mind not only where you are putting your money, but also where it is coming out of," Luschini says.

Health care, a sector that has been historically considered to be defensive in nature, is one area of the market that Luschini thinks could be susceptible to outflows of money if the market continues to gain steam.

Should this trend materialize, it could make for a rocky road for ETFs in the health-care space such as the Health Care Select SPDR(XLV Quote) and the Vanguard Health Care ETF(VHT Quote).

These funds have only recently begun to move off of their 52-week lows. They contain names such as Johnson & Johnson(JNJ Quote), Pfizer(PFE Quote) and UnitedHealth Group(UNH Quote).

And what if the U.S. dollar begins to rebound at some point?

Luschini points out that such a movement could prove to be problematic for portfolios that are heavily concentrated with international exposure.

"You would want to reconsider multinational corporation-themed ETFs and foreign-themed ETFs," he said.