Bellevue AI Health

US labor market data released in December pointed to a slowdown, while inflation in November came in below expectations. Against this backdrop, it didn’t come as a surprise that the Fed cut its policy rate by 25 bps to a target range of 3.5-–3.75%. The cautious outlook regarding further rate moves, however, was unexpected. The MSCI World and the S&P 500 gained 0.8% and 0.1% in December, while the Nasdaq 100 declined by 0.7%. Following strong performance in November, the healthcare sector fell by 0.8%. Pharma was the strongest contributor, supported by further industry agreements with the US government. The Bellevue AI Health Fund declined by 0.6% but outperformed its benchmark.

BioPharma (55.6% weighting at the end of the month) contributed +0.3% to absolute performance but slightly detracted from relative performance by -0.2%. The strongest contributors were Roche (+8.4%), Novartis (+6.5%) and Novo Nordisk (+4.0%), while Daiichi Sankyo (-13.4%), Alnylam (-11.9%) and Amgen (-5.3%) weighed on performance. In December, nine pharmaceutical companies, including Roche and Novartis, agreed in a further round of industry negotiations with the US government to lower prices for certain government programs and patients under the most-favored-nation pricing model. Daiichi Sankyo withdrew its FDA approval application for Dato-DXd in non-squamous non-–small cell lung cancer following the results of the TROPION-Lung01 study. As a result, market expectations for Dato-DXd declined significantly.

The medtech segment (27.7%) contributed +0.1% to absolute performance and +1.0% to relative performance. Medline (+44.8%), Dexcom (+4.6%) and Danaher (+1.1%) delivered the strongest positive contributions, while EssilorLuxottica (-11.6%), Medtronic (-8.1%) and Boston Scientific (-6.1%) detracted. We successfully participated in the Medline IPO, as the vertically integrated manufacturer and distributor of medical products benefits from high recurring demand and offers attractive growth and margin potential. Efficiency and scalability are further enhanced through robotics in logistics and AI-supported supply chain management. The announcement of an earlier-than-expected launch of Google’s smart glasses model put significant pressure on EssilorLuxottica’s share price.

Healthcare services providers (10.0%) detracted from absolute and relative performance by -0.6% and -0.4%, respectively. Elevance (+4.2%) and UnitedHealth (+0.8%) contributed positively, while BillionToOne (-37.1%), McKesson and Omada weighed on performance. Elevance benefited, among other factors, from positive comments by CVS Health’s management at its investor day regarding developments in commercial health insurance. Following the very successful IPO of BillionToOne in November, during which the share price more than doubled, investors took profits.

The technology segment (3.8%), which includes companies from healthcare and information technology, detracted from both absolute and relative performance by -0.1%. Nvidia (+5.4%) and Qualcomm (+2.3%) contributed positively, supported by confident management commentary at investor conferences. Waystar (-11.3%) and Veeva Systems (-7.1%) weighed on performance. Waystar shares came under pressure after management pointed to slowing growth and seasonal headwinds in patient payment volumes in December.
All performance data in USD / B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technological transformation, ranking alongside milestones such as the internet, cloud computing and the smartphone. This development is creating substantial opportunities for companies and investors, particularly in the healthcare sector. Various studies conclude that healthcare is among the sectors set to benefit most from the application of GenAI. This is primarily due to its significant efficiency potential, the vast availability of data and the substantial financial resources within healthcare systems.

We are already seeing faster drug development with higher probabilities of success, improved diagnostic and treatment approaches delivering better clinical outcomes, and GenAI supporting healthcare professionals in making better-informed decisions. We focus on healthcare companies that use GenAI as a core element of their business strategy and allocate substantial resources to this technology, as this can generate sustainable competitive advantages and drive above-average value creation. Technology risk is more manageable in healthcare, given the sector’s highly regulated environment.