Bellevue AI Health

In the US, strong labor market data and core inflation pushed market interest rates higher in September. The yield on 10-year US Treasuries rose by 0.5 percentage points to 5.3%. For the first time in more than three years, the Federal Reserve raised its key interest rate by 0.25 percentage points.

The MSCI World declined 1.2%, while the S&P 500 lost 0.4% and the Nasdaq 100 gained 3.7%, supported by the ongoing recovery in technology stocks. The healthcare sector fell 1.8%, weighed down by pharmaceuticals, medtech stocks and healthcare services providers. The Bellevue AI Health Fund declined 1.7%, slightly outperforming its benchmark.

Biopharma (60.4% weighting at the end of the month) contributed -0.8% to absolute performance and +0.1% to relative performance. Metis TechBio (+38.2%), Gilead (+2.4%) and AbbVie (+2.0%) made positive contributions, while Novo Nordisk (-15.5%), Novartis (-5.8%) and Roche (-4.2%) detracted. Metis TechBio benefited primarily from its inclusion in the Hong Kong Stock Connect program, which gave mainland Chinese investors direct access to its shares. The commercialization of its NanoForge AI platform and growing interest in AI-driven drug development provided additional support. Novo Nordisk came under pressure following its Capital Markets Day. Its medium-term growth targets were broadly in line with expectations, but investors remained cautious ahead of pending clinical data on CagriSema and Zenagamtide.

Medtech stocks (24.3% weighting) detracted -0.3% from absolute performance and had a neutral impact on relative performance. Thermo Fisher (+9.5%), Intuitive Surgical (+7.9%) and Danaher (+3.9%) made positive contributions, while Stryker (-14.7%), Abbott (-10.4%) and Boston Scientific (-9.6%) weighed on performance. Thermo Fisher (+13.1%) and Danaher (+7.4%) advanced following positive management comments and growing confidence in a recovery in end markets for life science instruments. Stryker was weighed down by persistent supply issues in its vascular business and weaker demand for large joint implants in Europe. Boston Scientific came under pressure after a cyberattack caused significant lost sales, making its 2026 full-year targets increasingly difficult to achieve.

Healthcare services providers (11.3% weighting) contributed -0.4% to absolute performance but +0.1% to relative performance. BillionToOne (+17.4%) and HCA Healthcare (+3.2%) made positive contributions, while Omada Health (-15.2%), UnitedHealth (-5.2%) and McKesson (-3.5%) detracted. BillionToOne rebounded from its sharp correction in August, while HCA Healthcare benefited from favorable polling numbers for the Democrats ahead of the November midterm elections. Omada shares declined after the long-term targets presented at its Investor Day failed to fully meet investors' high growth expectations, despite higher margin projections.

The fund's tech exposure (3.9%), which includes companies from both the healthcare technology and information technology industries, had no significant impact on absolute or relative performance. Qualcomm (+8.5%), Nvidia (+3.6%) and Microsoft (+1.1%) made positive contributions, while Oracle (-7.9%) and Waystar (-3.2%) detracted. Qualcomm benefited from a contract with Amazon Web Services for custom AI chips worth up to USD 60 bn. Oracle came under pressure as the expansion of its AI business requires substantial investment, weighs on free cash flow and increases its dependence on major customer OpenAI.

All performance data in USD/B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technology-driven transformation that ranks right next to other key milestones such as the Internet, cloud computing and smartphones. GenAI is creating tremendous opportunities for businesses and investors, especially in the healthcare sector. According to a number of studies, the healthcare sector is expected to be one of the industries that will benefit the most from the deployment of GenAI. This forecast is mainly based on the vast potential for efficiency gains in healthcare systems, on the large, readily available amounts of data in healthcare systems and on the considerable financial resources available for healthcare needs.

Medications are already being developed more quickly and with better rates of success, new diagnostic and treatment methods are producing better clinical outcomes, and GenAI is helping medical professionals make better and more informed decisions. We focus on healthcare companies that have made GenAI a core element of their business strategy and that are investing substantial resources in this technology to gain a lasting competitive advantage and achieve superior growth in corporate value. The technology risk here is more calculable than in other industries because healthcare is such a heavily regulated industry.