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Business Report Shareholder letter

Shareholder letter

Gebhard Giselbrecht, Chief Executive Officer, and Veit de Maddalena, Chairman of the Board

Dear Shareholders,

2023 was another challenging year for Bellevue Group. The below-average market performance of Bellevue's key markets in the healthcare sector once again impacted the development of our Group and tested us on both the investment and client side.

Challenging market environment for Bellevue Group persists in 2023

What made 2023 a remarkable year from an investment perspective is the continued staccato of extraneous events that impacted markets on the one hand, and the concentration of investment performance leadership with a few large cap stocks within major indexes on the other.

We have seen markets being buffeted by continued interest rate hikes (to 5.5% in the US), geopolitical tensions, the collapse of financial institutions, enthusiasm about AI and finally the reversal of interest rate and inflation expectations towards the end of the year. The «higher for longer» interest rate mantra lost weight in the second half of the year and gave way to expectations of lower interest rates towards the end of the year.

At the same time, a few mega cap tech companies largely drove the rally of major broad stock market indices in the developed world. For any active equity investor not allocated (or underallocated) to these select winners, absolute and relative underperformance was the consequence. It did not help that emerging markets and particularly China and Hong Kong continued to exhibit poor investment performance due to the deteriorating domestic economic situation as well as political concerns.

As a consequence, the healthcare sector overall saw one of the worst relative annual investment performances in 2023 with a similarly narrow investment performance leadership within the sector (by a few mega caps). In combination, these developments have been particularly hard hitting on Bellevue Group given our focus within the healthcare sector on smaller and medium-sized growth companies and more balanced regionally weighted strategies including Asia/China.

We continue to consider the healthcare sector with its fundamental attractions and positive long-term drivers as very attractive.

We are convinced that this focus and specialization in line with our long-term oriented fundamental investment approach allows us to capture the attractive medium to long-term investment opportunities in the healthcare sector as we have shown in the past. We also continue to consider the healthcare sector with its fundamental attractions and positive long-term drivers as attractive, even if it means that we are seeing a significant impact of the above-mentioned market environment on our results today.

Financial results are reflecting the challenges

Our asset base (AuM) has decreased substantially from CHF 9.4 bn to CHF 6.9 bn (–26%). This was driven by negative absolute investment performance as well as reallocations by clients.

In line with this development, our revenues from management fees decreased by 24% to CHF 79.3 mn based on an average AuM base of around CHF 8.2 bn. Total operating income amounted to CHF 81.9 mn and were just 15% lower than the previous year mainly due to an improved net financial investment result but also due to the realization of performance fees from the private market business.

On the cost side, there was some offset from our performance-linked compensation model as a buffer. Despite continued investments into people and infrastructure we have been able to reduce operating costs by close to 5% year on year.

Nevertheless, with CHF 15.2 mn our group net profit is down 40% on a year-on-year basis. The resulting cost-income ratio of 71% is in excess of our medium-term target range of 60–65%.

We are not at all satisfied with the result we delivered for our investors and shareholders. It is and remains our ambition as a specialized asset manager to create added value for all our stakeholders.

Financial solidity as the basis for an attractive dividend policy

Dividend 2024


CHF 1.15

Our balance sheet has remained strong and free of debt. This affords us the requisite resilience to weather difficult market conditions like these and provides strategic flexibility, including the seeding of innovative investment strategies. Finally, it allows us to continue an attractive and shareholder-friendly dividend policy for investors – a dividend of CHF 1.15 is being proposed by the Board of Directors for approval at the upcoming Annual General Meeting of Bellevue Group (resulting in a dividend yield of about 4.7% based on the share price as per end of 2023).

Product range well positioned to capture growth opportunities in 2024

The current situation is an opportunity for us to take stock, refine our value proposition to investors and focus on what we do well as well as to lay the foundation for future growth with attractive investment propositions for our clients. We currently focus our internationally recognized investment expertise on the three sectors healthcare, selected niches and private markets.

Our flagship products BB Biotech AG, Bellevue Medtech & Services, Bellevue Digital Health as well as the Bellevue Healthcare Trust are attractively positioned in different segments of the market and offer interesting upside potential thanks to an appealing valuation.

With the Bellevue AI Health and the Bellevue Obesity Solutions Fund, we are starting 2024 with two new strategies capturing long-term secular growth trends. The Bellevue Diversified Healthcare strategy, launched two years ago, offers a more benchmark-oriented strategy geared towards larger capitalized companies, which is performing very well in the current environment.

Our Entrepreneur investment solutions in Europe and Switzerland showed a significant revival based on a pleasing performance in 2023. We see valuation, momentum, and investment track record as being strong arguments for investments in these selected niches. For more absolute return-oriented clients our Bellevue Global Macro and Bellevue Option Premium products have exhibited attractive performances in 2023.

On the private markets side, we successfully exited one investment in 2023 despite the difficult market environment. Our well-diversified and mature portfolio of direct investments will create further opportunities for relevant exits and thus provide an attractive performance-based income (carry income). Following the promising development of our first private market vehicle Bellevue Entrepreneur Private KmGK, launched just over two and a half years ago, our ambition is to prepare the launch of a second product later in the year 2024.

Development of investment solutions 

Central banks had a big impact on financial markets in 2023. Higher interest rates and signs of slowing economic activity kept investors on guard. The «higher for longer» mantra for interest rates began to resonate less during the second half of the year, ushering in strong gains for both equities and bonds. Several Bellevue strategies have already benefited from these tailwinds and others are well positioned for performance in 2024.

Continued progress made on ESG

Our commitment to environmental, social and governance (ESG) principles continues to guide our investment approach and the way we manage Bellevue Group. We believe that responsible and sustainable practices not only contribute to positive societal impact but also enhance long-term shareholder value. You will find details in our newly enhanced sustainability report.

Sustainability Report

Sustainability is and will remain an important factor in Bellevue Group’s business strategy, because it is crucial to the success of our business over the long term and for creating value for all stakeholders. In order to deliver on this claim as best as possible going forward, we strengthened Bellevue’s sustainability governance and organization in 2023. All relevant roles and responsibilities were reviewed at management level as well as throughout the workforce and changes were made where necessary.

Strengthening of the Executive Board of Bellevue Group

We started into the year 2024 with Gebhard Giselbrecht as the new Bellevue Group CEO. Gebhard has comprehensive international asset management experience across multiple functions. Our CFO Michael Hutter will leave Bellevue Group with Stefano Montalbano (previously Head Finance & Controlling) taking over as of March 1, 2024. The Board thanks both former CEO André Rüegg and Michael Hutter for their long tenure at Bellevue Group and their contribution to the transformation of Bellevue Group into a pure play asset manager.

To underpin and support the development of Bellevue Group going forward, the Group Executive Board will be extended with additional competencies as of March 1, 2024. Next to Gebhard Giselbrecht as CEO and Stefano Montalbano as CFO, Markus Peter will join as Head of Products & Investments and Patrick Fischli as Head of Distribution. Markus Peter and Patrick Fischli have been in management positions at Bellevue Asset Management since 2009 and have contributed substantially to the positioning of Bellevue Group as specialized asset manager.

Long-term growth prospects intact and a cautiously optimistic view on 2024

We believe in the attractive long-term growth prospects of our industry and particularly the healthcare sector within it. We are cautiously optimistic that 2024 will offer a more supportive market environment. The return to lower interest rates is constructive for the healthcare sector overall and in particular for Bellevue’s investment focus on smaller and medium-sized growth stocks. The valuations for the sector and especially for smaller and medium-sized growth companies are now more attractive on both a market-relative and an absolute basis than they have been for a long time. Additionally, investor sentiment has improved significantly since last quarter of 2023 as the renewed focus is on company fundamentals rather than macro. The broadening of market leadership has been evident now for some months and has been already reflected in the performance of our strategies.

Bellevue Group is well positioned to capture the above-mentioned growth opportunities in an improving market environment leveraging our expertise, long-term investment track record and passionate employees.

However, we do not expect this to be a straight path and despite the cautious optimism, we are expecting continued volatility in the market throughout the year as inflation and rate expectations continue to adjust and recognize the potential uncertainties that may arise from any geopolitical escalations, and the changes that will inevitably come to pass in such a busy election year.

Bellevue Group remains committed to fostering innovation, exploring new investment horizons, and maintaining transparency with our valued customers and shareholders. Rest assured that we are working hard to capture the growth opportunities ahead and we appreciate your trust and support.

The acknowledged expertise and tireless commitment of all our employees is an essential ingredient for the success of Bellevue Group. We thank our team for their vigour and commitment in these challenging times.

Veit de Maddalena

Chairman of the Board

Gebhard Giselbrecht

Chief Executive Officer

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