Bellevue AI Health

June was primarily marked by the temporary ceasefire and de-escalation in the Middle East. The US economy remained resilient. Core inflation came in slightly below expectations despite elevated crude oil prices, while the labor market proved more resilient than expected. Against this backdrop, the Fed, under its new Chair Kevin Warsh, left interest rates unchanged.

The MSCI World declined -0.7%, the S&P 500 -1.0%, and the Nasdaq 100 -0.1%. Unlike in previous months, the information technology and communication services sectors weighed on performance as investors became more cautious on AI-related stocks given their elevated valuations. The healthcare sector, by contrast, gained +5.0%, driven by pharmaceutical and biotechnology companies as well as healthcare services providers. The Bellevue AI Health Fund advanced +3.6%, but nevertheless underperformed its benchmark.

Biopharma, with a weighting at the end of the month of 59.5%, contributed 3.2% to absolute portfolio performance but detracted -0.5% from relative performance. Positive contributions came from AbbVie (+15.6%), Johnson & Johnson (+12.7%), and Eli Lilly (+8.5%), while Otsuka (-9.1%), Pfizer (-8.0%), and Gilead (-5.4%) weighed on performance. AbbVie benefited from the announced acquisition of Apogee Therapeutics, which was viewed as a strategic strengthening of its immunology pipeline. Pfizer came under pressure after a Phase III study of a cancer drug failed to meet its primary endpoint.

The medtech segment, with a weighting of 23.2%, contributed +0.1% to absolute performance and had a neutral impact on relative performance. Positive contributions came from Kestra Medical (+19.7%), Medtronic (+6.9%), and Abbott (+6.0%), while Boston Scientific (-11.7%), Intuitive Surgical (-6.3%), and Hoya (-6.2%) detracted. Kestra Medical benefited from the rally in small- and mid-cap medtech & services stocks. Medtronic advanced following better-than-expected quarterly sales and solid guidance for fiscal year 2027. Boston Scientific came under pressure due to slowing WATCHMAN growth and intensifying competitive pressure.

Healthcare services, with a weighting of 12.4%, contributed 0.9% to absolute portfolio performance but detracted -0.2% from relative performance. Positive contributions came from Omada Health (+22.1%), BillionToOne (+21.2%), and UnitedHealth (+9.1%). Omada Health and BillionToOne benefited from the momentum in small- and mid-cap medtech & services stocks. UnitedHealth advanced following positive management comments at investor conferences, encouraging hospital utilization surveys, and Humana’s confirmation of its 2026 earnings guidance in the important Medicare Advantage business.

The technology segment, with a weighting of 3.1%, which includes companies from both the healthcare and information technology sectors, detracted -0.5% from both absolute and relative performance. Waystar (+3.1%) and Veeva Systems (+1.8%) made positive contributions, while Oracle (-35.1%), Qualcomm (-26.1%), and Microsoft (-17.2%) weighed on performance. Waystar and Veeva Systems benefited from the recovery in software stocks. Oracle came under pressure as quarterly results only narrowly exceeded high expectations, while its increased capital expenditure outlook for data centers reinforced concerns about the investment requirements of AI infrastructure expansion.

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 alongside major milestones such as the Internet, cloud computing, and the smartphone. GenAI is creating tremendous opportunities for businesses and investors, particularly in the healthcare sector. A growing number of studies conclude that healthcare is among the sectors most likely to benefit from the adoption of GenAI. This is primarily due to the sector’s significant potential for efficiency gains, the vast amount of available data, and the substantial financial resources dedicated to healthcare.

We are already seeing medications being developed more quickly and with higher probabilities of success, new diagnostic and treatment approaches delivering better clinical outcomes, and GenAI helping healthcare professionals make more informed and effective decisions. We focus on healthcare companies that have made GenAI a core element of their business strategy and are investing substantial resources in this technology, enabling them to gain a sustainable competitive advantage and achieve above-average value creation. The technology risk is more predictable in healthcare because it is a highly regulated sector.