Bellevue Medtech & Services

The broad equity market closed the reporting month of July slightly lower (-0.4%), while the US technology sector (Nasdaq 100) recorded a sharp decline (-7.4%). The technology sector lost significant momentum and caused uncertainty among investors, leading to profit-taking in AI stocks. Sectors with significant catch-up potential, such as the medtech sector (+4.5%), benefited from this development. The Bellevue Medtech & Services Fund (+3.5%) also performed well but was unable to outperform its benchmark. The long-awaited rotation back into the medtech sector appears to be materializing, supported by historically low valuation levels and the sector’s relative underperformance over the past 18 months. As expected, even average corporate results were sufficient to trigger significantly positive share price reactions. Investors are beginning to recognize the investment opportunities in the sector again. Q2 reporting showed stable patient volumes and a healthy investment environment in healthcare and helped attract additional investor capital.

The established industry heavyweights Abbott (+16.3%), Boston Scientific (+8.5%), Medtronic (+8.2%) and Stryker (+2.5%), as well as diabetes companies Dexcom (+22.8%) and Insulet (+7.6%) and Glaukos (+18.2%), contributed positively to portfolio performance. Abbott delivered good Q2 2026 results, with the strong outlook for H2 2026 and 2027, supported by accelerating revenue growth and numerous product launches, driving the share price higher. Boston Scientific once again lowered its outlook for 2026 and 2027, but in doing so paved the way for investors to reinvest in the company and benefit from its low valuation. Dexcom exceeded investor expectations for revenue and earnings and also raised its full-year outlook. Record-high numbers of new patients and higher profitability led to improved investor sentiment. Glaukos’ Q2 2026 revenue came in 23% above investor expectations, and its full-year outlook was raised by 10%. Life science tools company Thermo Fisher (+13.5%) also delivered very good results.

Intuitive Surgical (-11.9%), Edwards (-5.7%) and Hoya (-3.8%) weighed on portfolio performance. The Q2 2026 results of Intuitive Surgical and Edwards exceeded investor expectations. However, Intuitive Surgical was penalized for slowing procedure growth in the US and the absence of an increase in its full-year procedure guidance – the market had priced in a guidance upgrade. Edwards’ share price initially reacted strongly positively (+6%) but was affected by profit-taking towards the end of the month. Hoya’s supplier businesses for the semiconductor and data storage industries are its key value drivers, which meant that the share price was affected by the general uncertainty in the technology sector.

US health insurers consolidated following their very strong performance in recent months: Molina (-15.2%), Humana (-9.2%), Centene (-3.9%), Elevance (-3.7%) and UnitedHealth (-1.2%). Q2 2026 results showed the expected moderation in the development of medical costs (MLR). In some cases, expectations had been somewhat higher, particularly for Humana, but Q2 2026 was successful and confirmed the long-term investment case. Health insurer share prices continue to offer significant upside potential and remain well below their previous highs. By contrast, US hospital operators Tenet Healthcare (+35.0%) and HCA (+2.3%) performed positively.

All performance data in EUR / B shares.

Over recent years, a gap has opened between the medtech sector's consistently solid operating fundamentals and its depressed valuation multiples. We expect this gap to begin closing.

There are also clear signs that M&A activity is accelerating again and that large-cap companies will use their strong balance sheets to drive additional external growth. The most important long-term success factor remains the approval and successful commercialization of innovative new products, which should continue to support robust revenue growth.

We continue to expect a significant recovery in profit margins for US health insurers in 2026 and the years beyond, particularly in the Medicare Advantage segment. Persistently elevated interest rates could provide additional support to earnings growth.