NEW YORK (

TheStreet

) -- At the Academy Awards Sunday night, the movie industry's best and brightest celebrated the finest Hollywood performances in 2009.

The media sector, which includes the film industry, has reason to celebrate as well. So far in 2010, the representative ETF,

PowerShares Dynamic Media Portfolio

(PBS) - Get Report

, is outperforming the broader markets.

Year to date, the fund is up by 10.7% compared to a 2.5% gain for the

S&P 500 Index

as represented in

SPDRs

(SPY) - Get Report

, 1.5% for the

Nasdaq

as tracked by

PowerSharesQQQ

( QQQQ), and 1.6% for the

Dow Jones Industrial Average

as represented

Diamonds Trust Series 1

(DIA) - Get Report

.

Unlike the broader markets, PBS was not derailed significantly by the news of China's credit-tightening policies after Jan. 19. During the market dip that occurred after that time, PBS spent far fewer days beneath its 50-day moving average than SPY, QQQQ, or DIA. Furthermore, PBS's 50-day moving average trend line did not even retreat from its upward sloping performance, while the slopes of the trend lines for SPY, QQQQ, and DIA, turned negative.

What made PBS resilient to the action in the broader markets and will it continue to outperform?

I see that PBS's outperformance certainly has not been driven by its top holding,

Google

(GOOG) - Get Report

, which accounts for 5.0% of the fund and has shed 9.0% year to date.

Also, although the rest of the PBS' top-five holdings,

Disney

(DIS) - Get Report

,

News Corp

(NWS) - Get Report

,

Time Warner

(TWX)

, and

Comcast

(CMCSA) - Get Report

outperformed the broader markets year to date, they did not outperform PBS.

However, it's important to note that PBS applies a relatively equal weighting to each of its 30 holdings and that the smallest allocation of net assets such as

Sirius

(SIRI) - Get Report

, which accounts for 2.4% of holdings, can drive the fund's performance.

SIRI was one of the holdings in PBS that drove the fund's outperformance of the markets as the stock has jumped by 57.3% year to date. Other holdings with strong performances were

E.W. Scripps

(SSP) - Get Report

,

HSN

(HSNI)

,

McClatchy

(MNI) - Get Report

,

Valassis Communications

(VCI)

, and

Entercom Communications

(ETM) - Get Report

, which increased by 39.4%, 38.2%, 45.2%, 55.8%, and 70.6% respectively.

Although some of these are not top-10 holdings in PBS, they collectively account for 17.3% of the fund's holdings.

In the case of SSP, a newspaper company with diversified media operations, strong earnings drove shares higher. MNI, another newspaper operator had its credit ratings upgraded by Moody's and S&P in February since the company's debt burden, which had harmed shares of the company last year, is becoming more manageable.

HSNI, the television shopping company, had stronger-than-expected earnings and a positive outlook that drove up shares. ETM, a radio company, also went up after it reported a return to profit in its earnings.

On the other hand, VCI, a mail-marketing company, did not impress investors with its earnings in late February. Although shares dropped sharply following the news, they quickly reversed and continued marching higher, a sign of deeper strength in this sector.

All in all, the fuel behind these stocks and the sector is something that will continue to burn going forward. The media sector, which thrives on advertising, will have an improving outlook as economic recovery frees up more money for the advertising budgets of companies.

In terms of performance, PBS fell further than the broader markets during the crisis and outperformed during the recovery. On a two-year timeline, PBS has outperformed SPY, but has not yet surpassed QQQQ. Because many of the companies in PBS trade on the Nasdaq is room for this fund to outperform.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion did not own any of the equities mentioned.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.