Lets take a quick look at the current state of affairs in biotech & biopharma.
We write often about the IBB, which is iShares’ Nasdaq Biotechnology Index-tracking ETF. It’s a nice tool because it’s weighted in favor of large-cap biopharma, similar to most professional portfolios; it contains ~150 components (diversified, at least in the sector); and it’s the largest/most liquid of the biotech-tracking ETFs, with $8.86 billion in assets. Using the IBB instead of the NBI also allows us to see volume.
As an aside, alternatives include:
- The NYSE Arca Biotechnology Index (BTK) and associated fund, FBT (First Trust NYSE . . .). The FBT has $3.47 billion in assets and only includes 30 constituents, with a minimum initial market capitalization of >$1 billion.
- The SPDR S&P Biotech ETF (XBI), which tracks the performance of the S&P Biotechnology Select Industry Index. XBI has about $2.3 billion in assets and is equal-weighted with 100 constituents. This means volatile small- and mid-cap stocks make up a larger portion of the portfolio when compared to the IBB.
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