Bellevue Digital Health (Lux)
Portfolio consisting of high-quality growth stocks showing double-digit revenue growth
Regulation and stringent quality requirements limit the technological risk
Demographic changes and an aging general population demand greater efficiency and cost-effectiveness
Please find a more detailed description of share classes here.
The fund invests globally at least two-thirds of the portfolio in companies whose business activities have a strong focus on the digitalization of the healthcare sector. A global network of experts spanning scientific and industrial fields support the Management Team in forming opinions. The selection of portfolio companies is bottom-up.
Indexed performance (as at: 20.05.2022)
NAV: EUR 173.51 (19.05.2022)
Rolling performance (19.05.2022)
|19.05.2021 - 19.05.2022||-34.10%||n.a.|
|19.05.2020 - 19.05.2021||30.39%||n.a.|
|17.05.2019 - 19.05.2020||16.11%||n.a.|
|18.05.2018 - 17.05.2019||21.02%||n.a.|
Annualized performance (19.05.2022)
|Since Inception p.a.||8.42%||n.a.|
Cumulative performance (19.05.2022)
Facts & Key figures
The fund invests globally at least two-thirds of the portfolio in companies whose business activities have a strong focus on the digitalization of the healthcare sector. A global network of experts spanning scientific and industrial fields support the Management Team in forming opinions and making investment decisions. The selection of portfolio companies is bottom-up.
Without limiting the scope of the term Digital Health, businesses in the digital health sector comprise companies that are in a good position in the segments of diagnostics, healthcare IT, life sciences tools, medical technology, healthcare service providers or wellness to be able to benefit from the advent of digital technologies. This allows for new innovative products, treatment methods and services, as well as broad improvement in efficiency across the entire healthcare sector, including in the research and development of medicines.Show moreShow less
Investment suitability & Risk
|Investment Manager||Bellevue Asset Management AG|
|Custodian||RBC Investor Services, Luxembourg|
|Fund Administrator||RBC Investor Services, Luxembourg|
|Year end closing||30. Jun|
|NAV Calculation||Daily "Forward Pricing"|
|Cut of time||15:00 CET|
|Subscription Fee (max.)||5.00%|
|Total expense ratio (TER)||2.20% (29.04.2022)|
|SFDR category||Article 8|
Key data (29.04.2022, base currency USD)
|No. of positions||42|
Top 10 positions
Opportunities & Risks
- Demographic changes and an aging general population demand greater efficiency and cost-effectiveness.
- New technologies conquer the healthcare sector.
- Portfolio consisting of high-quality growth stocks showing double-digit revenue growth.
- Regulation and stringent quality requirements limit the technological risk.
- Bellevue has been a Healthcare pioneer since 1993 and is one of the biggest independent investors in the sector in Europe today.
- Equities are subject to price fluctuations and so are also exposed to the risk of price losses.
- Investments in foreign currencies are subject to currency risks.
- The fund may invest in financial instruments that might have a rather low level of liquidity, which can in turn affect the fund’s liquidity.
- Equities linked to technology or digitization can be subject to higher-than-average fluctuations in value.
- Increased opportunities through possible derivative transactions go hand in hand with higher risk of loss.
Review / Outlook
Stock markets closed sharply lower in April. After trading sideways during the first three weeks of the month, equities were pressured by Fed Chairman Powell’s comments that the US central bank was prepared to raise the federal funds rate more quickly and decisively to battle inflation. The appreciation of the dollar (+5.0% to the euro, +5.3% to the Swiss franc) was the only factor that brought some relief for the fund's investors last month. Growth stocks experienced another wave of heavy selling that led to a significant correction in the US tech sector (Nasdaq 100 -13.3%). The broad healthcare sector (MSCI World Healthcare Net -4.6%) gave up less ground, but there was a considerable divergence between the performance of large cap healthcare stocks (Russell 1000 Healthcare -5.2%) and the high-growth small and mid caps (Russell 2000 Healthcare -18.0%). The Digital Health Fund (-20.4%) was unable to escape the general trend and it slipped even deeper into the red at the end of the month when a few companies in its portfolio released disappointing quarterly earnings announcements.
Of the 44 stocks in the portfolio, only JD Health (+4.9%) and Procept BioRobotics (+1.6%) made a positive contribution to the fund's performance. Only a few companies in the portfolio had released their first-quarter results by the end of April. The good results reported by digital medtech companies Dexcom (-20.1%), Omnicell (-15.7%) and Abiomed (-13.5%) were overshadowed by negative macro factors.
Globus Medical (-10.2%) announced a change in CEO (internal CEO successor) and reported slightly weaker-than-expected first-quarter results but it did not revise its previous guidance for 2022 sales and profits. Early indicators that the capital investment cycle might lose some momentum led Intuitive Surgical (-20.7%) shares lower. At the same time, both of these companies reported that the upturn in treatments/surgical procedures seen in March continued into April. This prompted Intuitive to raise its forecast range for full-year procedure growth in 2022 to 12-16%. Quarterly results from Align (-33.5%) confirmed that consumers plan to tighten their purse strings (incl. China), on top of the problems in the supply chain.
Most of the core positions in the digital health portfolio, for example Insulet (-10.3%), Inspire Medical (-19.8%), Shockwave Medical (-27.1%), Axonics (-17.2%), Tandem Diabetes (-17.0%) and Outset Medical (-23.2%), have yet to publish their first-quarter results, but they are not exposed to capital investment or consumer spending cycles. Meanwhile they stand to benefit greatly as they enter new markets, launch new products, and gain market share at the expense of non-digital rivals, plus treatment/procedure volumes are rebounding now that the Omicron surge is winding down.
The outlooks from Teladoc Health (-53.2%) and Accolade (-68.3%) were disappointing, and these two stocks had a combined negative impact of -2.6% on portfolio performance in April. The two companies met expectations with their reported first-quarter revenues, but they had to cut their revenue growth guidance because of customer uncertainty in the face of the current economic environment (recession angst), which made customers reluctant to sign longer-term agreements. Besides that, many small, unprofitable providers of silo solutions are aggressively fighting for market share (e.g. through higher marketing spend, lower prices), which has made the sales process more complicated and costly. In this market environment, providers like Accolade that offer a high-quality personalized healthcare approach must work harder to win over potential customers and existing customers can still suddenly opt for a simpler solution. In our opinion, there’s no doubt that comprehensive solutions like the ones Teladoc Health offers (whole person care) will win out in the long run. In contrast to Teladoc Health (positive operating results), most of its competitors are still deep in the red and will need a steady infusion of capital to stay afloat. Some companies have based their business models on the highly profitable business of selling (prescribing) regulated substances and seem to view patient consultations primarily as a means to an end. We do not think this is a sustainable strategy, and actually rather risky from a legal standpoint. We also see little value added in the simplified healthcare navigation platforms some companies are offering in Accolade's target market. The rise and fall of Castlight is a good example of this. That said, investors will need more than a little patience during this period of transition until the right business models have been established. After the significant correction in digital health valuations, the potential returns have become much more attractive, and we already observed investors entering the Digital Health sector or adding to existing exposure in February and March. All perfromance data is in USD / B shares).
Our investment strategy focuses on innovative market leaders and well-financed companies. Over 90% of the portfolio companies have no immediate funding needs. The growing acceptance of digital solutions in the wake of the pandemic has pushed up the potential growth trajectory of the digital health investment case. We also expect M&A activity to pick up significantly. Strong growth momentum and non-cyclical demand put digital health stocks in an excellent position to deliver a pleasing performance.
Past performance is not a reliable indicator of future results and can be misleading. As the sub-fund is denominated in a currency that may differ than an investor’s base currency, changes in the rate of exchange may have an adverse effect on prices and incomes. Performance is shown net of fees and expenses for the relevant share class over the reference period. All performance figures reflect the reinvestment of dividends and do not take into account the commissions and costs incurred on the issue and redemption of shares, if any. Individual costs are not taken into account and would have a negative impact on the performance. With an investment amount of EUR 1000 over an investment period of five years, the investment result in the first year would be reduced by the front-end load of up to EUR 50 (5%) as well as by additional individual custody charges. In subsequent years, the investment result would also be reduced by the individual custody account costs incurred. The reference benchmark of this class is used for performance comparison purposes only (dividend reinvested). No benchmark is directly identical to a sub-fund, thus the performance of a benchmark is not a reliable indicator of future performance of the sub-fund it is compared to. There can be no assurance that a return will be achieved or that a substantial loss of capital will not be incurred. All figures in base currency in %, calculated by the total return / BVI method.Show moreShow less