Bellevue Medtech & Services

Global stocks (MSCI World Net Index +0.7%) treaded water in June, while the European market (Euro Stoxx 50 -1.1%) closed slightly lower. Stock markets were buoyed by a momentary easing of tension on the geopolitical stage. Meanwhile lower-than-expected inflation readings in the US pushed down bond yields. 10-year US Treasury yields declined by 17 bps to 4.2%. Lower US bond yields gave growth stocks the biggest boost but also kept the dollar under pressure, which continued to weaken (DXY dollar index -2.5%), losing no less than 3.7% of its value against the euro. In this context, the defensive and US-heavy healthcare sector (MSCI World Healthcare Net -2.1%) also traded lower, as could be expected, as did the medical technology sector (MSCI World Healthcare Equipment & Supplies Net -1.8%) and the Bellevue Medtech & Services Fund (-2.1%).   

There was hardly any relevant news flow during the month of June, given that the latest quarterly reporting season had just ended in the preceding month. Stocks mainly took their cue from macro factors, with the exception of the diabetes space. The annual American Diabetes Association (ADA) conference in Chicago provided further evidence of the tremendous clinical benefits that sensor-based continuous glucose monitoring (CGM) systems can bring. This is evident in both type 1 and type 2 diabetes and in particular for prevention purposes in the case of individuals with prediabetes, where the typical progression toward insulin treatment can be halted by using a CGM device. Companies offering diabetes treatment solutions received an additional boost when US Health Secretary Robert F. Kennedy Jr. (HHS Secretary) emphasized the important role wearable sensor technology can play in preventing diabetes. This could lead to faster-than-expected broad expansion of health insurance coverage for wearables. An announcement from the CMS (Centers for Medicare & Medicaid Services) led to some volatility at the end of the month though. The CMS said that insulin pumps and CGMs would be subject to its competitive bidding program in the future. We assume that this rule change is intended to reduce the profit margins of distributors (“middlemen”), as already seen in China. The shares of the major diabetes players Medtronic (+2.2%), Abbott (-1.8%), Dexcom (-1.8%) and Insulet (-6.7%) showed a mixed performance but, with the exception of Insulet, they still performed in line with or better than the broader medtech segment. Resmed (+1.7%), Siemens Healthineers (+1.4%), GE Healthcare (+1.3%), Align (+1.0%), Idexx (+0.8%) and Cooper (+0.6%) also made positive contributions.  
Performance detractors in the portfolio included Intuitive Surgical (-5.1%), EssilorLuxottica (-4.8%), Edwards (-3.5%), Becton Dickinson (-3.1%) and Boston Scientific (-1.5%). Intuitive Surgical shares came under pressure after Restore Robotics announced the commercial launch of remanufactured robotic instruments (scissors) for da Vinci surgical robotic systems (FDA clearance received in March 2025). We believe the risks associated with remanufactured instruments are currently low and should be well-contained over the long term. This is because the remanufactured instruments approved by the FDA are for use with Intuitive Surgical’s older systems such as Xi and Si. Intuitive Surgical is already marketing newer-generation systems (da Vinci 5) with enhanced features that are much more complex, such as Force Feedback technology.   

The performance of healthcare services providers (5.1% weighting) was mixed. Shares of HCA (-2.7%), the leading US hospital chain, closed slightly lower after gaining 10.6% in the preceding month.  Stocks of US health insurers Humana (+1.5%), Cigna (+1.2%), UnitedHealth (+0.4%) advanced, while Elevance (-1.8%), Molina (-5.8%) and Centene (-7.2%) headed south. All performance data is in EUR / B shares. 
 
 

Based on the very strong Q1 earnings reports from medtech companies and the full-year guidance for 2025 and our latest talks with company executives, we expect procedure volume growth to remain at high levels throughout 2025. The approval and subsequent launch of relevant new products will continue to bolster sales growth, too. Examples here are Abbott’s Lingo, Libre Rio, Libre 3, TriClip and AVEIR products, Boston Scientific’s Farapulse PFA system and Watchman FLX Pro device, and the new da Vinci 5 surgical robot from Intuitive Surgical. We expect sector pricing power to remain above historical levels in 2025, too. Margins should continue to widen thanks to the above-average sales growth and a wave of new product launches with high margins.   

Furthermore, there are already signs of considerable M&A momentum and large-cap companies are obviously willing to use their cash-rich balance sheets to drive external growth. Today’s attractive valuations are another argument for investing in the Bellevue Medtech & Services (LUX) Fund.