Bellevue Obesity Solutions

Global equity markets recovered sharply in April with the MSCI World Index raising 9.6%, driven by easing Middle East tensions and strong Q1 2026 earnings results. Healthcare underperformed the broader market, with the MSCI World Health Care Index remaining flat for the month (-20 bp). Against this backdrop, the Bellevue Obesity Solutions (Lux) Fund – I shares returned 0.4%, outperforming its benchmark by 68 bp.

Amongst healthcare subsectors, only healthcare services delivered a positive return in April (+14.4%; rebound driven by reimbursement rates and Q1 2026 company results). We saw disappointing performances from Healthcare IT (-6.4%), medtech (-4.5%), biotech (-2.6%), life science tools (-1.9%), and pharmaceuticals (-1.2%). Emerging market healthcare performed strongly in the month (+4.0%), followed by positive performances from Asia (+1.4%), and Europe (+0.7%). The US healthcare region delivered an negative absolute performance of -0.5% in April, with Johnson & Johnson the largest contributor.

Through the first half of the healthcare Q1 2026 earnings season (49/102 companies reported as at May 4, 2026), results and guidance changes were generally positive (+8.8% positive earnings). In addition, after several months of declining expectations, the full year 2026 earnings expectations for the sector increased during April.

April saw a mix of supportive regulatory and policy developments alongside continued strategic activity in biopharma. Eli Lilly’s approval of Foundayo (orforglipron) marked an important milestone for the oral GLP-1 market, while within healthcare services, Medicare Advantage (MA) rates came in higher than expected. Strategic activity also remained active, with Gilead acquiring Tubulis and Neurocrine acquiring Soleno. On the clinical side, Revolution Medicines reported notable pancreatic cancer data in metastatic PDAC, while AstraZeneca’s camizestrant faced a setback after the FDA’s advisory committee voted 6-3 against its benefit-risk profile in HR-positive, HER2-negative breast cancer with emergent ESR1 mutations.

Top absolute performers in the fund included UnitedHealth (+37%; strong Q1 results and MA rates), Humana (+36%; positive final MA rates), and Alphabet (+34%; strong Q1 results).

Top relative positive contributors included Amazon (overweight; +25.4 bp contribution; +27.3%, strong Q1 results), Galderma (overweight; +13.7 bp; +10.0%, strong Q1 2026 results driven by aesthetics and Nemluvio), and CVS Health (overweight; +13.7 bp; +16.9%, better MA rates). Top relative negative contributors included Merck & Co (overweight; -19.5 bp; -9.2%; consolidation after strong prior periods), Centene (underweight; -13.6 bp; +64.0%; strong results), and McKesson (overweight; -9.7 bp; -5.8%; consolidation after strong prior periods).

The near-term backdrop remains uncertain, with elevated oil prices, higher-for-longer interest rates, and unresolved geopolitical tensions. Despite this, equity markets have recovered significantly during April and early May 2026. Rate sensitivity and supply chain complexity warrant vigilance, though healthcare's defensive characteristics should provide relative resilience 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. 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.