Bellevue Medtech & Services

In March, the Iran conflict shaped equity markets, with the broad equity market closing down 4.1%. The sharp increase in oil prices fueled inflation concerns and pushed interest rates higher. The yield on the 10-year US Treasury rose by 0.4% to 4.3%, weighing on markets alongside recession fears. The healthcare sector (-6.1%) and the medtech sector (-9.7%) also corrected significantly. The more interest-rate-sensitive, high-growth medtech sector was particularly affected by the broad market sell-off. Our analysis shows that the relative valuation of the medtech sector has reached a historical low due to weak sector sentiment. The Bellevue Medtech & Services Fund (-9.8%) performed in line with its benchmark.

In this challenging market environment, there were only a few positive exceptions. The share price of Procept BioRobotics (+12.9%) recovered slightly after a sharp decline in the previous month of March. The Q4 2025 results released in February disappointed and the company simultaneously lowered its 2026 guidance. However, the investor day at month-end surprised positively, with 2027 targets coming in above expectations, which supported the share price in March.

GN Store Nord (+7.7%) announced the sale of its hearing aid business to Amplifon, which will significantly reduce the company’s leverage. As only the Headsets/Enterprise and Gaming businesses will remain after the transaction, there will no longer be any medtech exposure and we sold the position. Veeva (-1.2%) stabilized following AI-related concerns in the previous month, supported by strong Q4 2026 results. The company exceeded expectations in both revenue growth and margins. The 2027 targets were also set above analyst expectations. Edwards Lifesciences (-5.2%) reported excellent two-year clinical data for Evoque. This significantly increases the probability of sustained double-digit revenue growth and long-term market share gains. Edwards remains a core holding of the fund.

The remaining portfolio positions declined in March, driven by a broad sell-off, including Intuitive Surgical (-6.3%), Medtronic (-8.4%), Abbott (-9.6%), EssilorLuxottica (-11.9%), IDEXX (-12.4%), Alcon (-12.9%), Stryker (-12.9%) and GE Healthcare (-13.5%). Boston Scientific (-16.4%) also closed significantly lower, despite strong results from the CHAMPION-AF study, which showed that left atrial appendage closure with Watchman FLX was non-inferior to anticoagulants in stroke prevention and significantly reduced procedural bleeding as expected. While investors reacted positively, attention quickly shifted to the upcoming Q1 2026 results (to be published on April 22, 2026), which created selling pressure on the stock. As the expansion of the Watchman indication and reimbursement for stroke prevention takes approximately 6 to 12 months, many investors see a risk that Q1 2026 may again fall short of expectations, as already seen in Q4 2025.

Healthcare services providers showed mixed performance, but health insurers UnitedHealth (-4.8%), Cigna (-5.2%), Elevance (-5.8%) and Humana (-6.3%) performed relatively well. Investors expect that the final MA rate updates for 2027 will be increased significantly to at least +1%.

Life science tools companies Thermo Fisher (-3.3%) and Danaher (-7.6%) weighed slightly on performance, but investor sentiment improved noticeably during the reporting month.

All performance data in EUR / B shares.

Our discussions with numerous management teams during the J.P. Morgan Healthcare Conference in January have made us confident about the 2026 financial year. We expect solid Q1 2026 results from medtech companies, which should continue to benefit in 2026 from strong growth in surgical procedure volumes.

The currently record-high valuation discount of the sector relative to the US equity market is another factor supporting an investment in the Bellevue Medtech & Services (Lux) Fund. The return of investor interest in the healthcare sector and the current market environment make us very confident about the non-cyclical medtech sector. Inflows into the broader healthcare sector should also support the medtech sector, which still offers additional catch-up and re-rating potential. There are also strong indications that M&A activity is accelerating again, with large-cap companies expected to use their strong balance sheets to drive additional external growth. The key long-term success factor remains the approval and launch of relevant new products, which should continue to drive strong revenue growth.