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Biotech is having a great year on Wall Street, but it’s no thanks to the industry’s household names.

Biotech’s big indices have hit all-time highs in the last nine months, but biotech’s venerated Four Hoursemen — Amgen (AMGN), Biogen (BIIB), Gilead Sciences (GILD), and Celgene (CELG) — have all underperformed the S&P 500 in that same period. All of the industry’s gains can be attributed to mid-size drug makers and startups that have only recently gone public.


A closer look at two major biotech index funds, the XBI and the IBB, helps tell the story. The XBI is equally weighted, meaning it considers shares of the $60 billion Biogen the same as those of the $2 billion Intercept Pharmaceuticals (ICPT). The IBB, by contrast, is weighted by market cap, so swings in big companies’ stock prices have a larger effect than changes for smaller ones.

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