The performance disparity is a reminder that investors need to understand how an ETF’s tracking index works before buying. For example, XBI follows an equal-weighted benchmark, while IBB weights individual stocks by their market cap. Therefore, XBI allocates more to smaller stocks in the biotech sector.
IBB holds about $3.2 billion of assets, while XBI controls $880 million. IBB has seen year-to-date inflows of $347 million compared with $124 million for XBI, according to IndexUniverse data.
iShares Biotech ETF
