Best-Performing ETFs Point Way for Economy

The best-performing ETFs suggest investors are bullish in a turnaround in certain regions and industries.
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If the stock market is a bellwether for the economy, expect a revival in industrial production, Asia, the "green" movement and financial services.

Those are the messages from March's top-performing exchange traded funds, used by investors as trading tools to bet on entire industries or regions.

Assuming the stock-market turnaround in early March was more than an ephemeral bounce in a continuing bear market, lessons can be gleaned from the makeup of the adjoining list of the 25 best non-leveraged ETF performers for the month.

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Lesson 1: Industrial production will pick up.

Six metals ETFs are among the best performers, suggesting companies are ramping up manufacturing. Because basic metals are usually several levels below final product consumption, the strength of this sector indicates confidence in a broad recovery for manufacturing. However, one of the metals plays is

ELEMENTS MLCX Gold

(GOE)

, with the interest in gold reflecting concern about inflation.

With 24% of its portfolio in metals and mining,

PowerShares FTSE RAFI Basic Materials Sector Portfolio

(PRFM)

was included with the metals. Its primary holdings of chemicals also play a crucial raw-material role in basic industry.

Lesson 2: The Asia-Pacific region could lead the worldwide recovery.

The top-performing non-leveraged ETF in March --

iShares MSCI South Korea

(EWY) - Get Report

-- vaulted 31%, followed closely by

WisdomTree Pacific ex-Japan High-Yielding Equity Fund

(DNH)

, which climbed 24%. There are three other Asia-Pacific ETFs on the list.

Lesson 3: "Green" investments are for real.

Even those who don't agree with the science behind global warming can't ignore the facts that the second- and fourth-best performers are solar investments, and No. 10, the

iPath Barclays Capital Global Carbon Index Total Return

(GRN) - Get Report

, is a "carbon emissions" play. Commitments by Congress and the Obama administration to support and subsidize these industries are largely responsible for their attractiveness to investors.

Lesson 4: The financial sector is OK.

Four financial ETFs, including

Claymore/Clear Global Exchanges, Brokers & Asset Managers

(EXB)

, made the list. Closely related to the group is

PowerShares International Listed Private Equity

(PFP)

, whose holdings include a number of private-equity firms or managers as well as the consolidated exposure of the underlying portfolio investments.

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Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.