Bellevue AI Health

The US announcement of reciprocal tariffs on Liberation Day initially battered large-cap indexes such as the MSCI World (+0.9%), the S&P 500 (-0.7%) and the Nasdaq 100 (+1.6%), but stocks bounced back later in the month when the tariffs were suspended for a 90-day period.

The broad healthcare market (-1.9%) did not retreat as much early in the month but it was unable to keep pace with the total market as it recovered from the steep sell-off. The Bellevue AI Health Fund (-2.6%) trailed its benchmark.

BioPharma (53.1% weighting at the end of the month) contributed -0.3% to absolute performance and -0.1% to relative performance. Eli Lilly (+8.8%) released promising clinical data from a Phase III trial of the oral GLP-1 agonist orforglipron in patients with type 2 diabetes. The top-line data showed a very competitive profile for the new pill. Orforglipron was highly effective in lowering HbA1c, which is a measure of long-term average blood glucose levels. Investors, however, were more focused on the pill’s effect on weight loss. Here, in this relatively short (40-week) study, orforglipron showed a placebo-adjusted weight loss of 6.3% from baseline at the highest dose, which is comparable to Wegovy and better than the market expectation of a 5-6% reduction in weight. Orforglipron was discovered by Chugai (+27.0%) and licensed to Eli Lilly. Amgen (-6.6%), Abbvie (-6.0%), Johnson & Johnson (-5.7%) and Merck (-5.1%) had the most negative impact on fund performance in April. Investors worried that the US market share of Abbvie's Humira drug would shrink more quickly than expected due to strong competition from biosimilars. Humira is used to treat various inflammatory conditions.

Medtech stocks (28.0%) had a negative impact of -0.6% on absolute performance and -0.2% on relative performance. Hoya (+5.1%), Intuitive Surgical (+4.1%) and Boston Scientific (+2.0%) made positive contributions to performance, while Thermo Fisher (-13.8%), GE Healthcare (-12.8%) and Medtronic (-5.7%) detracted. Well-managed, innovative large-cap companies such as Intuitive Surgical and Boston Scientific showed quite clearly in their latest quarterly reports that trade tariffs posed much less risk to their earnings than investors had expected. Thermo Fisher and GE Healthcare were marked down due to their relatively high sales exposure to China, given the currently very high tariffs on this business.

Healthcare services providers (10.2%) contributed 1.7% to absolute performance and -0.4% to relative performance. McKesson (+5.9%) and LabCorp (+3.6%) made positive contributions to the fund’s performance, while UnitedHealth (-21.4%) and Elevance (-3.3%) detracted. UnitedHealth lowered its earnings guidance for 2025 by 12% despite a drop in medical service costs in the first quarter. Management attributed the guidance cut to sharply higher Medicare Advantage utilization late in the quarter, as well as lower OptumHealth earnings due to inaccurate patient risk assessments and a resulting drop in reimbursement levels.

The fund’s tech exposure (5.0%), which includes tech companies from both the healthcare and information technology industries, contributed 0.1% to absolute performance. Microsoft (+5.3%), Oracle (+1.0%) and Nvidia (+0.5%) made positive contributions, while Qualcomm (-3.4%) and Waystar (-0.5%) detracted.

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 the smartphone.

GenAI is creating tremendous opportunities for businesses and investors, especially in the health sector. According to a number of studies, the health sector will be one of the industries that will benefit the most from the deployment of GenAI. This forecast is mainly based on the considerable 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.

Already today medications are being developed more quickly and with better rates of success, for example, 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 value growth. The technology risk here is more calculable than in other industries because healthcare is such a heavily regulated industry.