Bellevue Obesity Solutions

Global equity markets were negative in June, with the MSCI World Index falling 0.7%. Healthcare outperformed the broader market, with the MSCI World Health Care Index up 5.0% in the month. Against this backdrop, the Bellevue Obesity Solutions (Lux) Fund – I shares gained 5.5%, outperforming its benchmark by 51 bp.

A US-Iran ceasefire agreement – still pending final ratification – dominated headlines in June, sending oil prices down nearly 20% from 2026 highs on hopes of reopening the Strait of Hormuz. Initial relief to risk sentiment was, however, offset by a more hawkish-than-expected Federal Reserve, which held rates unchanged but saw nine of eighteen officials now projecting a hike in 2026, pushing yields higher and weighing on global equities. The MSCI World ended the month modestly lower. Healthcare sector performance over the month was driven by Healthcare IT (+9.9%), Biotech (+8.7%), Healthcare Services (+8.1%), Pharma (+4.9%), Life Science Tools (+3.3%), offset by Medtech (-0.5%). Within healthcare, geographic performance was led by the US (+6.4%), Europe (+2.3%), Emerging Markets (+0.1%), while Asia (-2.7%) lagged.

At the American Diabetes Association (ADA), Eli Lilly's retatrutide set a new obesity benchmark with 30% weight loss at the highest dose; Sandoz received FDA acceptance of a generic tirzepatide filing. At the American Society of Clinical Oncology (ASCO), Akeso and Summit's ivonescimab demonstrated an overall survival benefit in first-line squamous NSCLC. Merck's tulisokibart became the first anti-TL1A to achieve a Phase III win in ulcerative colitis; AbbVie acquired Apogee Therapeutics for USD 10.9 bn. CMS draft IRA 2029 guidance proposed treating subcutaneous reformulations as the same drug for price negotiation, with J&J the most exposed among portfolio holdings. FDA leadership remained in flux with an interim commissioner following the May departures of Commissioner Makary and the head of CDER.

Top absolute performers in the fund included Structure Therapeutics (+36.4%; M&A speculation), Glaukos (+35.2%; support for iDose uptake), and Humana (+30.4%; full-year guidance reiteration).

Top relative positive contributors included Merck & Co (overweight; +27 bp; sac-TMT data presented at ASCO; tulisokibart UC win), Johnson & Johnson (overweight; +26 bp; sector rotation and apalutamide Phase III data), and Protagonist (overweight; +23 bp; rusfertide data at EHA). Top relative negative contributors included Dexcom (overweight; -19 bp; ADA data were positive; sector rotation from Medtech into biotech), Eli Lilly (underweight; -18 bp; retatrutide data at ADA), and Amazon (overweight; -16 bp).

The near-term backdrop remains uncertain, with the US-Iran ceasefire still pending ratification and interest rates expected to remain higher for longer. Despite this, equity markets have recovered significantly. Healthcare's defensive characteristics should provide relative resilience if conditions deteriorate.

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. Healthcare contributes approximately 18% of US GDP yet represents only around 10% of the S&P 500, a disconnect we expect to narrow over time.

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.