Aerospace and defense ETFs are among the top-performing sector funds the past three months, overcoming fears related to government spending cuts and sequestration.

For example, iShares US Aerospace and Defense ETF (NYSEArca: ITA) and the PowerShares Aerospace and Defense (NYSEArca: PPA) have rallied nearly 20% for the trailing three months.

Top holdings Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and General Dynamics (NYSE: GD) all posted better-than-expected quarterly earnings this week, even though U.S. defense spending has been slashed by sequestration cuts after Congress failed to come to an agreement on the federal budget. [Aerospace and Defense ETFs Face Debt Ceiling, Spending Cuts]

Sequestration will cut some $1 trillion from the defense budget over the next decade, according to The Washington Free Beacon.

Yet the aerospace and defense industry is holding up well this year due to technological innovations, big contracts, acquisitions and growing commercial demand, according to Zacks Equity Research.