Generative Artificial Intelligence is bringing about an unprecedented technological transformation. The tremendous opportunities this is creating, both for businesses and investors, are particularly compelling in the healthcare industry.

By Marcel Fritsch, Co-Portfoliomanager and Stefan Blum Co-Portfoliomanager, Bellevue Asset Management 

One way of profiting from the Generative Artificial Intelligence (GenAI) trend is to invest directly in technology companies such as Microsoft (OpenAI), Google or Amazon. This approach often entails significant volatility, though, because tech investors tend to price a company’s maximum future potential into its market valuation early on and the risk associated with future technology developments can turn out to be greater than expected.

«The investment approach we are taking with the Bellevue AI Health (Lux) Fund that was launched on November 30, 2023, is different. Our fund is clearly focused on GenAI and the resulting investment opportunities in the healthcare sector. Healthcare will benefit greatly from GenAI,» says Co-Portfolio Manager Stefan Blum, who explains the rationale behind the launch of Bellevue Asset Management's latest healthcare fund.

Tremendous Advantages

Companies that put GenAI at the center of their business strategy and allocate significant resources toward the development and deployment of this technology stand to gain a decisive competitive advantage. According to a PwC study, healthcare is one of the top three sectors that will benefit the most from GenAI.

«We firmly believe that GenAI will be a major driver of shareholder value in the healthcare sector. The IT-related risks of implementing AI in healthcare are more calculable than in other industries because healthcare is such a highly regulated market.

People's lives are at stake and the clinical benefit is what counts,» says Marcel Fritsch, Co-Portfolio Manager. «Successful deployment of GenAI also requires large amounts of data, and such data is exclusively owned by healthcare sector companies.

This is why partnerships between large healthcare businesses and large tech companies should be particularly fruitful – they establish the bridge between vital health-related data and GenAI technology,» he adds.

Broad Range of Application Areas

The greatest potential improvements that could be achieved through the usage of GenAI in healthcare are shorter drug development times, reduced drug development risks, new and better treatment methods, and significantly lower administrative spending.

Developing a new drug takes 10 to 15 years on average and costs 1 to 4 billion dollars. This process can clearly be optimized with generative AI. Companies such as Amgen are relying on «generative biology» approaches and have halved the average time required for target identification and verification while doubling the success rate.

Image Guidance

GenAI is also being used in medical imaging and diagnostics, as well as in ultrasound scanning systems equipped with AI-enabled image guidance, in systems that enable early diagnosis of heart failure, and in electronic health record systems, where it increases efficiency and minimizes the administrative burden.

UnitedHealth, the largest health insurer in the US, is an impressive example of GenAI adoption. It is using GenAI to identify and avoid unnecessary medical care and treatments. 

Strategy for Tech and Healthcare Investors

The Bellevue AI Health Fund (ISIN B-USD LU2721086093) is a global equity fund with an actively managed portfolio of 50 to 70 stocks, mostly from the healthcare sector, rounded out with a small number of tech companies that do much of their business with the healthcare industry.

The fund's focus is on liquid mega and large caps, supplemented with selected mid-cap investments. In addition to fundamental metrics ranging from valuation multiples and growth profiles to profit margins, a proprietary «Bellevue AI Affinity Score» has been developed to determine how attractive a company is from an AI perspective.

Well-Diversified Portfolio

The Bellevue AI Affinity Score measures company efforts to develop and deploy GenAI and the resources it is investing towards this end. From an investment perspective, this enhances the fund's ability to pick out the winners and avoid the losers, as stock performance will clearly diverge over time.

The estimated average annual sales growth of the fund's well-diversified portfolio over the next three to four years is about 8 percent and its average earnings per share growth is 15 percent. The fund is suitable for tech investors interested in an attractive diversification of their existing portfolio as well as for generalist investors seeking to invest in promising companies active in the healthcare sector.

Portfolio Managers Stefan Blum and Marcel Fritsch have many years of experience in healthcare and digital health investments. Dr. Annie Zeng, Catharina Claes, and Dr. Teresa Vilanova provide them with investment research and analysis support. The two Portfolio Managers also have access to the expertise of Bellevue’s 20-person healthcare investment team.

  •  Further information on AI Health Funds can be found here.

Bellevue is a specialized asset manager listed on the SIX Swiss Exchange with core competencies covering healthcare strategies, entrepreneur strategies, alternative and traditional investment strategies. Established in 1993, Bellevue, a House of Investment Ideas staffed by 100 professionals, generates attractive investment returns and creates value added for clients and shareholders alike. Bellevue managed 8.1 billion francs in assets as of June 30, 2023.

Disclaimer: This press release is issued by Bellevue Asset Management AG, which is an authorized asset manager subject to the supervision of the Swiss Financial Market Supervisory Authority («FINMA») and acts as an Investment Manager of the Bellevue Funds (Lux) SICAV. Bellevue AI Health Fund is a subfund of Bellevue Funds (Lux). The information and data presented in this press release are not to be considered as an offer to buy or sell or an invitation to subscribe any securities or financial instruments. For potential investors in Singapore Investment returns may increase or decrease due to exchange rate fluctuations. The fund(s) is not authorised or recognised by the Monetary Authority of Singapore (the «MAS») and its shares are not allowed to be offered to the retail public. The Sub-Fund is a restricted scheme under the Sixth Schedule to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations of Singapore. This press release is not a prospectus as defined in the SFA and accordingly, statutory liability under the SFA in relation to the content of prospectuses does not apply. The MAS assumes no responsibility for the contents of this Information Memorandum. You should consider carefully whether the investment is suitable for you and whether you are permitted (under the SFA, and any laws or regulations that are applicable to you) to make an investment in the Shares. If in doubt, you should consult your legal or professional advisor. This Information Memorandum has not been registered as a prospectus with the MAS. Accordingly, this Information Memorandum, the Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any persons in Singapore except in accordance with the restrictions and conditions under the SFA. By subscribing for Shares pursuant to the exempt offer under this Information Memorandum, you are required to comply with restrictions and conditions under the SFA in relation to your offer, holding and subsequent transfer of Shares.»
Hongkong: This section has been prepared solely for Hong Kong investors who invest or propose to invest in Shares of Bellevue Funds (Lux) (the «Company») in Hong Kong. Investors in Hong Kong should read this supplement in conjunction with the Prospectus for the Company (the «Prospectus»). References to the Prospectus are to be taken as references to that document as supplemented hereby. In addition, words and expressions defined in the Prospectus, unless otherwise defined below, shall bear the same meaning when used herein.
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