XBI: A Pure Play Biotech ETF In Need Of A Hedge

May 18, 2023 3:36 AM ETSPDR® S&P Biotech ETF (XBI), , , , , 9 Comments
Michael Thomas
697 Followers

Summary

  • Several ETFs exist offering investors concentrated biotech exposure that varies in stock selection and weighting schemes.
  • While all of the choices exhibit 90%+ exposure to biotech stocks, only XBI is a true pure-play at nearly 100%.
  • The low relative risk-adjusted performance and highly available options market make XBI an ideal choice for a risk-reducing hedge strategy.

Scientist In Laboratory

poba

The biotech industry is marked by high risk and high reward with company outcomes largely dependent on the success of breakthrough drugs and therapies. This magnifies single-stock risk which can be reduced by holding an ETF. This article covers several choices

This article was written by

697 Followers
Individual investor. Currently focusing on risk-reducing portfolio strategies.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of XBI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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