Bellevue Medtech & Services

The broad equity market (+1.2%) closed the month under review in positive territory, while the US technology sector (Nasdaq 100 +5.8%) performed significantly better. The broad healthcare sector (+0.6%) also posted a positive return, with higher-growth market segments such as biotech (NBI +2.3%) outperforming more defensive areas such as medtech (-3.9%). The Bellevue Medtech & Services Fund (-3.6%) was unable to escape this trend, but outperformed its benchmark. In the third quarter of 2026, the medtech sector (+2.2%) posted a positive return, outperforming the US technology sector (+1.2%) and keeping pace with the broad equity market (+2.6%). The long-awaited rotation back into the medtech sector appears to be taking place, supported by historically low valuation levels and the sector’s relative underperformance over the past 18 months. Investors are beginning to recognize the investment opportunities in the medtech sector.

Medtech companies Intuitive Surgical (+10.5%) and Sonova (+7.4%) made positive contributions to fund performance. Following a prolonged period of underperformance, the share price gains were primarily driven by multiple expansion. In addition, Intuitive Surgical plans to offer customers extended use of its surgical instruments from 2027, combined with a below-average price increase. This should, first, accelerate procedure volume growth, as lower instrument costs per procedure should stimulate demand; second, improve profitability thanks to the price increase; and third, help keep new competitors such as Medtronic at bay. Sonova benefited from accelerating market demand and the successful launch of new AI-based hearing systems that are significantly smaller and offer longer battery life than the previous model. Stryker (-12.6%), EssilorLuxottica (-9.2%), Zimmer Biomet (-8.8%), Abbott (-8.6%), Boston Scientific (-7.4%) and Cooper (-17.4%) weighed on fund performance. Stryker did not lower its full-year guidance but reported production issues at recently acquired Inari and stronger competition in hip implants. Cooper conducted a strategic review of its business activities. Investors were disappointed that, contrary to expectations, the CooperSurgical business will not be divested and that the outlook for CooperVision was lowered.

Life science tools companies Thermo Fisher (+12.2%) and Danaher (+6.5%) performed very well as their end markets continued to recover. At an investor conference, Thermo Fisher CEO Marc Casper said that the Chinese market had returned to growth.

US health insurers mostly performed well during the month under review: Humana (+2.0%), Elevance (+1.9%) and Cigna (+1.4%) closed higher, while UnitedHealth (-2.8%) corrected. US hospital operator HCA (+5.7%) also performed well, while Tenet Healthcare (-1.5%) experienced some profit taking following its strong performance.

All performance data in EUR/B shares.

Innovative medtech companies continue to demonstrate that leading market positions and high-margin product pipelines can contribute to positive earnings surprises and guidance upgrades even in a more challenging market environment. This also applies amid shifts in the payer mix at hospitals and changes in insurance coverage.

There are also strong signs that M&A activity is accelerating significantly again and that large-cap companies will use their strong balance sheets to generate an additional boost to external growth. The approval and launch of relevant new products remains the most important factor for long-term success and will continue to support strong sales growth.

For US health insurers in particular, we expect a significant margin recovery in 2026 and subsequent years, especially in the Medicare Advantage segment. Persistently high market interest rates could provide additional support for earnings growth.