Heavyweight Versus Equal Weight:
One could think of the statement regarding weight above in the biotech space as “risk-on” versus “risk-off”. The IBB is very top-heavy with a slant toward the “old tech” as more than 50% of the fund is within some of the top 10 holdings, including AMGN BIIB REGN and VRTX. The trend recently has been in favor of the former big names with big weightings in the IBB, even before today’s massive move in Biogen. Investors have had a defensive stance and that is one of the big reasons why the IBB now trades 9% off most recent 52 week highs, while the XBI still sits in bear market mode 24% off its peak made back in early February. A similar situation can be seen in the big consumer discretionary ETFs with the more equal weighted XRT down 4% from its 52-week highs, while the top-heavy XLY is 5% off its summit made in April (one has to give credit to the XLY for hanging in so well despite the action in the top 2 names in AMZN and TSLA). Either way, you slice biotech, one gets the feeling better days are ahead. Be careful with BIIB however as it has screamed higher several times before only to give back the large majority of its gains.