Bellevue Digital Health (Lux)
Portfolio consisting of high-quality growth stocks showing double-digit revenue growth
Regulation and stringent quality requirements limit the technological risk
Demographic changes and an aging general population demand greater efficiency and cost-effectiveness
Explained in 90 seconds
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The fund invests globally at least two-thirds of the portfolio in companies whose business activities have a strong focus on the digitalization of the healthcare sector. A global network of experts spanning scientific and industrial fields support the Management Team in forming opinions. The selection of portfolio companies is bottom-up.
Indexed performance (as at: 23.09.2022)
NAV: USD 158.71 (22.09.2022)
Rolling performance (22.09.2022)
|22.09.2021 - 22.09.2022||-46.32%||n.a.|
|22.09.2020 - 22.09.2021||32.91%||n.a.|
|20.09.2019 - 22.09.2020||36.90%||n.a.|
|21.09.2018 - 20.09.2019||-7.47%||n.a.|
Annualized performance (22.09.2022)
|Since Inception p.a.||5.58%||n.a.|
Cumulative performance (22.09.2022)
Facts & Key figures
The fund invests globally at least two-thirds of the portfolio in companies whose business activities have a strong focus on the digitalization of the healthcare sector. A global network of experts spanning scientific and industrial fields support the Management Team in forming opinions and making investment decisions. The selection of portfolio companies is bottom-up.
Without limiting the scope of the term Digital Health, businesses in the digital health sector comprise companies that are in a good position in the segments of diagnostics, healthcare IT, life sciences tools, medical technology, healthcare service providers or wellness to be able to benefit from the advent of digital technologies. This allows for new innovative products, treatment methods and services, as well as broad improvement in efficiency across the entire healthcare sector, including in the research and development of medicines.Show moreShow less
Investment suitability & Risk
|Investment Manager||Bellevue Asset Management AG|
|Custodian||RBC Investor Services, Luxembourg|
|Fund Administrator||RBC Investor Services, Luxembourg|
|Year end closing||30. Jun|
|NAV Calculation||Daily "Forward Pricing"|
|Cut of time||15:00 CET|
|Subscription Fee (max.)||5.00%|
|Total expense ratio (TER)||2.15% (31.08.2022)|
|SFDR category||Article 8|
Key data (31.08.2022, base currency USD)
|No. of positions||39|
Top 10 positions
Opportunities & Risks
- Demographic changes and an aging general population demand greater efficiency and cost-effectiveness.
- New technologies conquer the healthcare sector.
- Portfolio consisting of high-quality growth stocks showing double-digit revenue growth.
- Regulation and stringent quality requirements limit the technological risk.
- Bellevue has been a Healthcare pioneer since 1993 and is one of the biggest independent investors in the sector in Europe today.
- Equities are subject to price fluctuations and so are also exposed to the risk of price losses.
- Investments in foreign currencies are subject to currency risks.
- The fund may invest in financial instruments that might have a rather low level of liquidity, which can in turn affect the fund’s liquidity.
- Equities linked to technology or digitization can be subject to higher-than-average fluctuations in value.
- Increased opportunities through possible derivative transactions go hand in hand with higher risk of loss.
Review / Outlook
Stock markets began the month under review in the green but fell hard and fast at the end of the month. The sell-off was triggered by Jerome Powell's remarks that taming inflation was the Fed's top priority and that interest rates would likely be pointing up for longer than anticipated. The US tech sector (Nasdaq 100 -5.1%) and the broader healthcare market (MSCI World Healthcare Net -6.0%) traded sharply lower. The Bellevue Digital Health Fund (+0.8%) held its ground quite well amid the shifting macro factors that once again affected the performance of equity markets. Although many digital health companies have consistently delivered good results in the past, a prolonged phase of valuation contraction (which began very early in 2021, long before it began to spread to the broader stock market) led to steep losses in some digital health stocks. It seems that investors are again basing their decisions on the specific fundamentals of each company.
The second-quarter reporting season was mixed in August and is now coming to a close. 19 of the 39 stocks in the portfolio made a positive contribution to the monthly performance. Shockwave Medical (+40.7%), Penumbra (+17.8%), Axonics (+11.4%), TransMedics (+28.9%) and Outset Medical (+18.4%) made positive contributions to the portfolio performance. Shockwave's second-quarter sales beat expectations by more than 12% and the company revised its full-year targets sharply higher. In addition, FDA approval of Shockwave's “L6” intravascular lithotripsy catheter came sooner than expected. Penumbra sailed past the low market expectations for its second-quarter results. Axonics also beat analyst expectations for second-quarter sales by 15% and raised its top-line growth forecast for 2022 from +32% to +40%.
TransMedics beat investor expectations and secured sufficient capital to fund its long-term expansion plans by issuing new shares (3.25 million shares at an issue price of USD 40). Our visit to Boston in June 2022 confirmed that TransMedics' technology represents a paradigm shift in organ preservation for transplantation and creates novel possibilities, including organ optimization and viability assessment before transplantation. We therefore increased our position in the stock through the capital increase. Outset Medical was given a green light from the FDA and can resume deliveries of its Tablo Hemodialysis system for home use. In addition, the Department of Veterans Affairs signed a contract to sell Outset's Tablo hemodialysis system to the 106 VA hospitals nationwide (providing care to 35000 dialysis patients).
Performance detractors included Tandem Diabetes (-30.9%), Health Catalyst (-28.3%), Doximity (-21.6%), Teledoc Health (-15.7%), Align (-13.3%), Abiomed (-11.5%), Veeva Systems (-10.9%), Ambu (-10.7%), Intuitive Surgical (-10.6%), Inspire Medical (-8.4%) and Omnicell (-7.1%). These markdowns are attributable to a mix of profit-taking, recession fears and earnings announcements that fell short of market expectations.
Tandem Diabetes reported 2Q sales that were only slightly below analyst expectations. However, its US activities accounted for a significantly smaller share of overall business, which fueled investor fears that Insulet (+3.1%) might widen its share of the market with its newly launched Omnipod 5 and significantly slow the growth of Tandem Diabetes. We too expect the Omnipod 5 to be successful in the market, giving the entire insulin pump market a boost. However, we assume that the vast majority of Tandem Diabetes customers who have insurance coverage for a new pump will buy another pump from Tandem Diabetes. We also expect rival Medtronic to continue to lose market share. Health Catalyst published disappointing results and lowered its outlook for fiscal 2022 and 2023. We had already steadily reduced our position during the course of the year due to a lack of transparency and have now completely exited this position. All performance data is in USD / B shares.
The fund's investment strategy is focused on innovative market leaders and solidly financed companies. More than 95% of the companies in the portfolio have no immediate financing needs. Companies in the highly regulated and non-cyclical healthcare market also benefit from the industry’s high entry barriers.
The portfolio contains fast-growing, disruptive companies that are applying digital technology to improve healthcare delivery and outcomes while making healthcare more cost-effective. In addition, the estimated multi-year sales growth rate of the companies in the Digital Health Fund's portfolio currently averages 30%-plus and visibility is good.
The growing acceptance of digital solutions in the wake of the pandemic has pushed up the potential growth trajectory of the digital health investment case. We also expect M&A activity to pick up significantly. Equity capital investors have invested about USD 95 bn in 4000 privately held digital health firms since 2011, so we expect a steady stream of attractive IPOs in the coming years – another reason, and an important one, for investing in this sector.
Past performance is not a reliable indicator of future results and can be misleading. As the sub-fund is denominated in a currency that may differ than an investor’s base currency, changes in the rate of exchange may have an adverse effect on prices and incomes. Performance is shown net of fees and expenses for the relevant share class over the reference period. All performance figures reflect the reinvestment of dividends and do not take into account the commissions and costs incurred on the issue and redemption of shares, if any. Individual costs are not taken into account and would have a negative impact on the performance. With an investment amount of EUR 1000 over an investment period of five years, the investment result in the first year would be reduced by the front-end load of up to EUR 50 (5%) as well as by additional individual custody charges. In subsequent years, the investment result would also be reduced by the individual custody account costs incurred. The reference benchmark of this class is used for performance comparison purposes only (dividend reinvested). No benchmark is directly identical to a sub-fund, thus the performance of a benchmark is not a reliable indicator of future performance of the sub-fund it is compared to. There can be no assurance that a return will be achieved or that a substantial loss of capital will not be incurred. All figures in base currency in %, calculated by the total return / BVI method.Show moreShow less