Bellevue Obesity Solutions

Global equities were mixed in September, with MSCI World Index down 1.19% (in USD) on a net return basis. The S&P500 returned -0.45% (in USD) in September, while the NASDAQ Composite returned 1.86% (in USD).

Healthcare underperformed over the month, with the MSCI World Health Care Index down 1.79% (in USD) on a net return basis.

The Bellevue Obesity Solutions (Lux) Fund - I shares returned -2.1% (in USD), underperforming its benchmark by 27bp.

September was a tougher month for the sector after a strong summer. The Fed raised rates by 25 bp to 3.75-4.00% on 16 September.

The biggest clinical setback came on 4 September, when Novartis and Ionis reported that pelacarsen failed to reduce cardiovascular events in the Phase 3 Lp(a)HORIZON outcomes trial despite lowering Lp(a). The first dedicated Lp(a) outcomes failure casts doubt over the class, including Amgen's olpasiran and Lilly's lepodisiran. Novo Nordisk was the weakest large cap, down about 14%, after a capital markets day on 21 September that lacked a concrete turnaround plan.

Chinese pharma and CDMO names rallied after Beijing's 15th Five-Year Plan set ambitious targets for domestic drug innovation. Managed care sold off after CVS flagged persistently high medical costs.

On policy, the administration added nine companies to its most-favored-nation Medicaid pricing deals, bringing the total to 26, and on 30 September finalized the GLOBE model applying international reference pricing to Medicare Part B drugs from 1 January, with companies holding earlier White House deals expected to be exempt.

Top absolute performers in the fund included WuXi AppTec (+13.6%; China pharma rally on Beijing's 15th Five-Year Plan), Thermo Fisher (+9.5%; positive commentary during conferences), and Intuitive Surgical (+7.9%; positive commentary during conferences).
Top relative positive contributors included Novo Nordisk (not invested; +27 bp; disappointing Capital Markets Day), Thermo Fisher (overweight; +14 bp; UBS upgrade to Buy, orders outpacing revenue), and WuXi AppTec (overweight; +13 bp; China pharma rally on Beijing's 15th Five-Year Plan).

Top relative negative contributors included Stryker (overweight; -17 bp; persistent peripheral vascular supply constraints and joint replacement softness), Glaukos (overweight; -15 bp; Epioxa claims-processing delays and uncertainty around 2027 launch), and Natera (not invested; -15 bp; positive analyst coverage and genomics sentiment).

The near-term backdrop remains uncertain, with elevated oil prices, higher-for-longer interest rates, and unresolved geopolitical tensions. The approaching US midterms as well as unstable interest rate expectations may lead to increased volatility.

Despite this, equity markets have been resilient. Rate sensitivity and supply chain complexity warrant vigilance, though healthcare's defensive characteristics should provide relative stability if conditions deteriorate further.

The structural case for healthcare remains intact and increasingly compelling. Regulatory uncertainty has materially eased, valuations remain near decade lows, and biopharma fundamentals continue to stabilize.

At current valuations, Medtech looks increasingly attractive, with strong fundamentals driven by innovation in new therapeutic areas such as renal denervation and pulse-field ablation. Healthcare contributes approximately 18% of US GDP yet represents only around 6% of the S&P 500, close to 20-year lows.

Biotechnology continues to transition toward cash-generative, launch-driven business models, while large-cap pharma faces a biologic patent cliff between 2029 and 2032 and holds over USD 200 bn in acquisition capacity, underpinning a multi-year M&A cycle.

The fund maintains a high-conviction, diversified approach with a focus on obesity and metabolic disorders, positioned to capture the structural recovery and near-term catalyst-driven opportunities.