The S&P 500 index rose  7.2% during Q3--its best quarterly performance in about five years. The index is up about 9% this year.

Booming economy and rising corporate earnings were the main reason for investor optimism. And, rising earnings made valuations more attractive.

Further, trade tensions impacted foreign stock markets much more than domestic stock indexes.  As a result, investors continued to pour money into US stocks as they were seen as a safe haven amid trade turmoil.

While technology and consumer discretionary sectors continue to be the top performing sectors year-to-date, healthcare emerged as the new leader during Q3.

Healthcare is seen as a defensive sector and some money managers reduced their positions in big tech stocks like Facebook and added to their positions in healthcare stocks. They largely avoided riskier biotech stocks within healthcare and instead focused on health insurers, pharmaceuticals and medical device makers.

Industrials was the second best performing sector, up about 11%. This sector had been impacted earlier by trade tensions and rebounded nicely later after it became clear that the domestic economy may stay largely immune to trade and tariff headwinds.  

The ETFMG Alternative Harvest ETF (MJ Quick QuoteMJ - Free Report) —the only pure-play US listed marijuana ETF-- surged 36% during the quarter.

The other two top-performing ETFs were the Health Care Select Sector SPDR Fund (XLV Quick QuoteXLV - Free Report) and the SPDR S&P Aerospace & Defense ETF (XAR Quick QuoteXAR - Free Report) —which gained about 15% each.

To learn more about these ETFs, please watch the short video above.

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