The strong performance is being driven by low expectations among analysts and dovish undertones from the Federal Reserve. Lackluster growth, low oil prices, and the strong dollar reduced earnings expectations during the first quarter, which paved the way for a series of earnings surprises moving into the second quarter. The central bank’s decision in March to reduce its number of planned rate hikes helped further ease market concerns.

Below, MutualFunds.com takes a look at some key trends to watch in the second quarter and mutual funds that investors may want to consider.

Blackrock and PIMCO warned investors in March that inflation could finally be picking up thanks to stabilizing oil prices and a tighter labor market. While they recommended inflation-linked bonds and gold as a way to offset the impact of these trends, investors may also want to consider transitioning into the energy and materials sectors. These sectors have been depressed and could benefit from a move into inflation-resistant assets.

The Vanguard Energy Fund (VGENX) is one of the largest mutual funds targeting the energy industry with $9 billion in assets under management and a low 0.37% expense ratio. Not surprisingly, the fund’s top holdings include multinational energy corporations like Exxon Mobil Corporation (XOM) and Chevron Corp. (CVX). Over the past 52 weeks, the fund fell a dramatic 14% due to cratering crude oil prices and OPEC drama.

The Fidelity Select Materials Portfolio (FSDPX) is a great option for those looking for exposure to materials. The fund has about $1.4 billion in assets under management and a 0.8% expense ratio. Some of the fund’s largest holdings include chemical companies like Dupont de Nemours & Co. (DD) and Eastman Chemical Co. (EMN). Over the past 52 weeks, the fund has fallen more than 9%, but it has since rebounded to return about 3.8% year to date.

Investors considering these mutual funds should be aware of the significantly higher risk. With OPEC controlling a huge chunk of oil supply, energy mutual funds are subject to unpredictable volatility and could see more downside before any upside. Further, commodities have been increasingly influenced by Chinese trading and consumption, which means that their prices could similarly depend on the country’s rebounding economy and could move lower before going higher.

Many international markets appear attractively priced relative to domestic markets following the dramatic turnaround from mid-February. After falling double digits, emerging markets have experienced a modest rebound that could be poised to continue. Many of these equities are trading at 11.9x forward multiples compared to 14.2x for developed markets and nearly 20x for the United States, according to data from Fidelity.

The most popular emerging-market mutual fund is the Vanguard Emerging Markets Stock Index Fund (VEIEX) with over $50 billion in assets under management. With a modest 0.33% expense ratio, the fund holds nearly 4,000 emerging-market equities with a mean market capitalization of $13.4 billion. These companies include popular names like Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), China Mobile, Ltd. (CHL), and Infosys Ltd (INFY).

Another popular option is the Fidelity Emerging Markets Fund (FEMKX), which has over $3 billion in assets under management and a 1.05% expense ratio. In this fund, investors have exposure to emerging and developed markets with a focus on India, China, and the United States, which could help reduce volatility compared to other pure plays. The fund also offers a high level of currency diversification to offset the impact on the dollar.

As with the domestic energy and materials sectors, emerging markets represent a riskier bet on a recovery in the global economy.

There are many different opportunities for investors moving into the second quarter of the year. In the U.S., investors may want to consider transitioning into energy and materials assets as a way to profit from growing inflation expectations. Those willing to look abroad may want to consider emerging markets given their improving economics and cheap price-earnings multiples compared to U.S. and developed-market peers.