Emerging markets represented one of the hottest sectors of last year, with the SPDR S&P Emerging Markets ETF ( GMM), iShares MSCI Emerging Markets Index ( EEM) and Vanguard Emerging Markets Stock ETF ( VWO) up 15% or more in 2010. Food-price inflation, though, has taken some of the shine off emerging-market investments. This year, those same ETFs are each down more than 3%. Meanwhile, China's red-hot economy has forced the country's central bank to raise key interest rates three times since October to combat inflation. "From an asset-allocation perspective, we've shied away from emerging markets since the end of last year," says Nolte. "They just have not performed well. Part of that reason is the issue of higher energy and commodity costs. It's having an impact on those economies." Beyond emerging markets, Pavlik says U.S investors should watch Europe, as any impact associated with the Mideast crisis would like be felt across the pond first. "We're seeing some signs of higher inflation in Europe already," he says. "The positive take-away from that is that Europe is contributing less to the global recovery than other places of the world like Asia or the U.S. It will be fairly contained unless that trouble continues to spread to a more sensitive area, like Saudi Arabia. The other leaders in the Arab world realize that they have to pacify their people before they're the next to fall." -- Written by Robert Holmes in Boston. >To contact the writer of this article, click here: Robert Holmes. >To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet. >To submit a news tip, send an email to: email@example.com.