Bellevue AI Health

August readouts showed a continued decline in US economic activity. Jobs data for July weakened, and the initial nonfarm payroll numbers for May and June were revised down by about 250,000. Core inflation was largely in line with expectations, which allowed Fed Chair Powell to flag a rate cut for September.

That helped push large-cap indexes such as the MSCI World (+2.6%), the S&P 500 (+2.0%), and the Nasdaq-100 (+0.9%) into positive territory. The defensive healthcare sector (+5.1%) made much better gains over the month, and the Bellevue AI Health (Lux) Fund (+4.5%) also closed higher but was not quite able to keep up with its benchmark.

Biopharma (53.3% weighting at the end of the month) contributed +2.5% to the fund’s absolute performance but had a negative impact of 0.2% on relative performance. The selling pressure triggered by the US government’s July proposal to impose MFN drug pricing clearly eased in August. Novo Nordisk (+18.2%), AbbVie (+11.3%), and Johnson & Johnson (+8.3%) were the top performers in this segment, while Recursion Pharmaceuticals (-21.0%), Vertex Pharmaceuticals (-14.4%), and Eli Lilly (-0.8%) had the greatest negative impact. Eli Lilly released topline results from its phase III trial of orally administered orforglipron in patients with obesity. Average weight loss (-12.4% or -11.5% placebo-adjusted) missed investor expectations of a 13%-15% reduction. Meanwhile, the oral amycretin pill developed by Novo Nordisk showed a greater weight loss of 13.1%, which led its shares to higher ground.

The medtech segment (30.0%) contributed +0.8% to absolute performance and had a neutral impact on relative performance. Insulet (+17.9%), Thermo Fisher Scientific (+5.4%), Abbott (+5.1%), and Danaher (+4.4%) were performance drivers, while Dexcom (-6.7%) and Intuitive Surgical (-1.6%) detracted. Insulet clearly beat the consensus sales estimate for Q2 and increased its full-year sales guidance for 2025 by nearly three times the amount exceeded. Danaher and Thermo Fisher Scientific advanced as the selling pressure triggered by Washington’s MFN pricing initiative subsided.

Healthcare service (9.8%) contributed +1.6% to absolute fund performance and had a neutral impact on relative performance. Top performers here were Omada Health (+35.2%), UnitedHealth (+24.2%), and Elevance Health (+12.6%). UnitedHealth shares traded sharply higher thanks to the news that Berkshire Hathaway had taken a stake in the company and the company’s appointment of a new CFO following a series of guidance cuts. The insurer also reached a settlement with the US Department of Justice over its proposed acquisition of Amedisys.

The fund’s tech exposure (6.5%), which includes companies from both the healthcare and IT industries, had a negative impact of 0.2% on both absolute and relative performance. Qualcomm (+9.5%) and Waystar (+2.4%) made positive contributions, while Oracle (-10.9%), Veeva Systems (-5.3%), and Microsoft (-4.9%) had a negative impact. Oracle’s underperformance reflects the general weakness in AI stocks, a cooling economy, and Nvidia’s cautious China stance.

All performance figures are in USD, with fund performance shown for B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technology-driven transformation that ranks right next to other key milestones such as the Internet, cloud computing, and the smartphone. GenAI is creating tremendous opportunities for businesses and investors, especially in the healthcare sector. According to a number of studies, the healthcare sector will be one of the industries that will benefit the most from the deployment of GenAI. This forecast is mainly based on the vast potential for efficiency gains in healthcare systems, on the large, readily available amounts of data in healthcare systems, and on the considerable financial resources available for healthcare needs.

Medications are already being developed more quickly and with better rates of success, new diagnostic and treatment methods are producing better clinical outcomes, and GenAI is helping medical professionals make better and more informed decisions. We focus on healthcare companies that have made GenAI a core element of their business strategy and that are investing substantial resources in this technology to gain a lasting competitive advantage and achieve superior value growth. The technology risk here is more calculable than in other industries because healthcare is such a heavily regulated industry.