Bellevue Obesity Solutions

Global equity markets continued to grind up, with the MSCI World Index rising 0.7% in February, supported by resilient earnings momentum, despite a negative thesis building on the impact of artificial intelligence (AI) on software companies. The healthcare sector outperformed the broader market, with the MSCI World Health Care Index up 2.9% in the month. The Bellevue Obesity Solutions (Lux) Fund (I shares) advanced by +2.8% in February 2026, slightly underperforming its benchmark by 6 bp. Relative performance was driven primarily by stock-specific factors and subsector allocation, in a month that strongly favored defensive large-cap pharmaceuticals over innovation-led and live science tools exposure.

Performance across healthcare subsectors was mixed in February, with dispersion increasing significantly. Pharmaceuticals (+5.4%), healthcare services (+5.2%), and biotechnology (+3.5%) outperformed, supported by their defensive characteristics and building narrative that pharmaceuticals, in particular, could be winners from AI efficiency gains. In contrast, healthcare IT (-13.6%), life science tools (-7.0%), and medtech (-0.7%) lagged amid cautious guidance during the results season, and in the case of healthcare technology and parts of life science tools (e.g. CROs), building concerns around AI disrupting business models. Regionally, Asia led (+6.5%), followed by the US (+3.2%), Emerging Markets (+2.9%), while European healthcare lagged (+1.9%).

Within the fund, the three best absolute performers in February were Garmin (+25.4%; strong Q4 results), McKesson (+18.8%; strong results/guidance), and Chugai Pharmaceuticals (+17.4%; expectation building into orforglipron oral GLP-1 launch. The three weakest absolute performers in the month were Novo Nordisk (-36.1%; poor results/ guide and weak REDEFINE-4 clinical trial data), Structure Therapeutics (-28.8%; weakening M&A narrative), and IQVIA (-22.3%; negatively impacted by the AI narrative).

The most important clinical trial readout in the month was the REDEFINE-4 Phase-III trial, in which Novo Nordisk’s CagriSema produced meaningful weight loss (23 % at 84 weeks) but failed to meet its primary endpoint of non-inferiority versus Eli Lilly’s Zepbound/tirzepatide (25.5 % weight loss), reinforcing Lilly’s superiority in the obesity drug market.

The healthcare sector is entering a new and durable phase of growth following several years of structural and policy-related headwinds. Policy and regulatory uncertainty has materially eased, valuations remain close to decade lows, and investor confidence is gradually returning as fundamentals stabilize across biopharma. Despite contributing approximately 18% of US GDP, healthcare equities still represent only around 10% of the S&P 500, highlighting a persistent disconnect between economic relevance and market representation. Key industry overhangs – pricing reform, FDA restructuring, and the implementation of the Inflation Reduction Act – have largely cleared or proven manageable.

Within this recovery, biotechnology has emerged as a primary growth engine, transitioning from binary R&D outcomes toward cash-generative, launch-driven business models supported by premium pricing, leaner cost structures, and disciplined capital allocation. At the same time, large pharmaceutical companies face a significant biologic patent cliff between 2029 and 2032 and hold strong balance sheets with over USD 200 bn in aggregate acquisition capacity, underpinning a multi-year M&A cycle. Investor participation continues to broaden, with specialist investors remaining highly engaged and generalist investors selectively returning via large-cap value, structural growth, and commercial-stage biotechnology opportunities.

Against this backdrop, the fund maintains a selective, high-conviction strategy with diversified exposure across obesity-, metabolism-, and fitness-related themes, emphasizing biotechnology and life-science tools as core overweight positions to target structural and cyclical return potential.