Bellevue Digital Health

The broad equity market posted a slightly negative performance in June (-0.7%), as did the US technology sector, represented by the Nasdaq 100 (-0.1%). Within the technology sector, performance diverged significantly across the various AI clusters. Slowing momentum and diverging performance trends caused investors to become unsettled for the first time, prompting profit-taking in AI-related stocks. Sectors with significant catch-up potential, such as healthcare (+5.0%), benefited substantially from this rotation. The medtech sector (+0.0%) kept pace with the broader equity market, while the Bellevue Digital Health fund (+4.8%) delivered a significantly stronger performance. The long-awaited rotation back into the healthcare and digital health sectors now appears to be materializing. The next important catalyst will be the Q2 earnings reporting season. We expect stable patient volumes and a healthy investment environment across the healthcare sector, which should attract additional investor inflows and further reinforce the ongoing sector rotation.

During the month under review, 23 of the fund's 35 portfolio holdings made a positive contribution to performance, led by Adaptive Health (+41.6%), 10X Genomics (+35.5%), Glaukos (+35.2%), Alamar (+32.2%), Natera (+21.5%), BillionToOne (+21.2%), Kestra (+19.7%), LivaNova (+11.4%), and Illumina (+7.9%).

Life science tools and diagnostics companies significantly outperformed the broader equity market during the month. The wave of M&A activity in the biotech sector and the reinstatement of NIH research funding in the US provided a strong tailwind for life science tools companies. Adaptive Health announced that it intends to separate its MRD business (minimal residual disease testing for blood cancers) from its immunomedicine business (drug discovery). The market viewed this as a value-enhancing event because it sharpens the company's focus on the profitable MRD diagnostics segment. 10X Genomics announced the acquisition of Proteintech Genomics as well as a research collaboration with the Cleveland Clinic to develop novel diagnostics for bladder cancer. Natera provided a significant boost to the entire diagnostics industry. Signatera MRD was included in the NCCN Guidelines for bladder cancer, representing an important step toward broad reimbursement coverage. The National Comprehensive Cancer Network (NCCN) Guidelines are considered the global gold standard for cancer treatment. In addition, Japan's Pharmaceuticals and Medical Devices Agency (PMDA) approved Signatera MRD for adjuvant colorectal cancer. Japan could rapidly become the world's second-largest MRD diagnostics market, where Natera enjoys a clear first-mover advantage. Digital medtech company Glaukos benefited from positive physician feedback regarding the reimbursement criteria for iDose.

The fund's performance was mainly weighed down by Procept BioRobotics (-14.2%), Dexcom (-8.7%), EssilorLuxottica (-8.4%), Intuitive Surgical (-6.3%), and the Chinese portfolio holdings Ping An Healthcare Technology (-21.8%), Ali Health (-15.2%), and JD Health (-14.5%). Procept BioRobotics benefited from improved reimbursement, although a competing technology (PAE / prostate artery embolization) has performed significantly better than originally expected. Dexcom was affected by profit-taking and by the emerging debate surrounding Abbott's glucose-ketone sensor. The launch of lower-priced AI smart glasses by Meta, together with uncertainty surrounding future ownership changes within the EssilorLuxottica founding family's holding company, weighed on EssilorLuxottica's share price. Our Chinese holdings suffered from negative investor sentiment toward China's healthcare sector and from increased US scrutiny of Chinese biotech licensing transactions.

All performance data in USD / B shares.

From a fundamental perspective, digital health companies remain on a stable path toward above-average growth, which we expect to continue throughout the remainder of the year. The positive sector dynamics and renewed investor interest in healthcare leave us very confident about the outlook for the sector in 2026. Continued inflows into the broader healthcare sector should also benefit the digital health segment.

The approval and commercial launch of important new products should continue to support strong revenue growth. Besides innovation, which remains the key value driver, attractive valuation levels and the expected acceleration of M&A activity and IPOs provide compelling reasons to invest in the Bellevue Digital Health fund.