Bellevue Obesity Solutions

Global equities rose in September 2025 (MSCI World Index; +3.2%), while healthcare lagged (MSCI World Health Care Index; +1.0%) as political uncertainty weighed on stocks for much of the month. The Bellevue Obesity Solutions (Lux) Fund (I shares) gained 2.0% in USD, outperforming its benchmark by 107 bps.

Large-cap healthcare lagged in September amid tariff headlines, MFN drug pricing concerns, and the risk of a US government shutdown. However, late-month news flow helped sentiment recover. In contrast, SMID-cap biotech outperformed (Russell 2000 Biotech; +11%), supported by M&A activity (Roche/89bio, Pfizer/Metsera, Genmab/Merus), positive clinical readouts (e.g. Ionis pharmaceuticals, uniQure), and the Fed’s base rate cut.

Ahead of the September 29 drug pricing deadline, pharma and the industries lobby group (PhRMA) signaled flexibility through direct-pay obesity models, selective EU price cuts, and US CapEx pledges. On September 30, Pfizer struck a deal with the administration: MFN pricing in Medicaid (<5% of US sales), a global pricing framework for new drugs, discounted direct-to-consumer sales («TrumpRx»), and a USD 70 bn US manufacturing/R&D investment – giving Trump a visible «deal moment.» This helped to change sentiment on the sector, driving a rally on the last day of September. Beyond the political noise, we note the CEO transition announcement at GSK was taken positively by the market.

Among portfolio holdings, Ionis pharmaceuticals (hypertriglyceridemia data; +53%), Metsera (Pfizer takeover announced; +48%), and Corcept Therapeutics (+19.2%; clinical progress at EASD) delivered the strongest absolute performance for the month.

Healthcare equities remain under-indexed at <9% of the S&P 500 versus ~18% of US GDP and are still trading at near-decade-low relative multiples. Pharmaceutical valuations reflect EPS downgrades tied to drug-pricing reform, which looks increasingly unlikely to come. After several difficult years of headwinds, we are increasingly confident that the sector is healing.

Along with discounted valuations and improving certainty around the operating environment, the macro backdrop could move toward a supportive phase for healthcare. The sector, and biotech in particular, has also tended to benefit during Fed cutting cycles. In addition, the sector has historically proven to be a good hedge in slowdowns, outperforming in every US recession since 1990 with an average 10-point excess return versus the S&P 500.

Long-term structural growth drivers remain intact, including aging populations, expanding access in emerging markets, and innovation in areas like robotics and AI. Importantly, innovation is central to addressing rising societal costs through efficiency gains and reduced long-term care burdens. Against this backdrop, the fund maintains a selective, high-conviction strategy with diversified exposure to the obesity and fitness theme and an overweight in biotechnology.