Biotech index landscape

When I was looking at the components of the XBI, I found that one of the CRISPR companies (CRSP) wasn’t in it which seemed odd. It is however in IBB and ARKG. This got me wondering why some are in one group and not in the other.

Why some biotechs are in XBI, IBB, or both

The main difference between IBB and XBI that I can find is that XBI is an equal weight ETF, whereas IBB is market cap weighted. The practical effect of this is that XBI has a proportionally larger weight in smaller biotechs and will trend more with those than large cap biotech and big pharma. But I haven’t been able to find more information on what the selection criteria are for each.

What about ARKG?

ARKG is a discretionary investment vehicle that is using ARK’s own insight to select stocks that will theoretically perform best in creating the future. It’s done really well for a few years but also took part in the large decline in biotech in 2021. What would you guess is the overlap between these three universes?

Above is a three way Venn diagram showing the overlap. The biggest surprise to me was that only half of ARKG overlaps with either index. But beyond that, ARKG doesn’t seem to be significantly more heavily weighted in any of these indices than would be expected by chance.