XBI follows the S&P Biotechnology Select Industry Index, an equal-weight benchmark.

“Because M&A target companies are not usually large conglomerates, equal weighted index strategies with a deeper and more diverse market cap profile should likely capture more of this price jump, because smaller companies comprise larger portions of the portfolio than they would in a market cap-weighted index,” said SSgA.

ETF traders who are betting big on the biotechnology sector rebound have also utilized leveraged long options including the Direxion Daily S&P Biotech Bull Shares (NYSEArca: LABU), which takes the 3x or 300% daily performance of the S&P Biotechnology Select Industry Index.

For more information on the healthcare sector, visit our healthcare category.

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