Tareno Health­care Funds Monthly Report, September 2026

Market review

Health­care posted a return of ‑1.8% in September, while global equities declined by 1.2%. Ongoing broker confe­rences remained the primary source of current corpo­rate updates, with end markets generally assessed as stable to incre­a­singly positive. At the subsector level, Life Sciences Tools & Services showed one of the most construc­tive develo­p­ments, while trends in the MedTech sector remained largely stable despite ongoing weakness in some highly acute areas. Comments from the biotech sector were more mixed, with recent clinical setbacks raising questions about the sustaina­bi­lity of the positive momentum observed at the begin­ning of the year. In the Managed Care sector, uncer­tain­ties regar­ding the Medicare Advan­tage Stars ratings, as well as emerging cost pressures, led to a more cautious investor stance ahead of the upcoming ratings and quarterly earnings reports. Health­care also benefited from its growing role as a defen­sive hedge against AI/tech. Concerns about the pace of AI develo­p­ment led to a partial rotation into more defen­sive and less tech-corre­lated sectors. On the M&A front, Astra­Ze­neca invested USD 2.0 billion in Summit Thera­peu­tics, while Telix agreed to acquire ITM Isotope Techno­lo­gies for up to USD 2.4 billion. In addition, reports emerged regar­ding a poten­tial sale of J&J’s ortho­pe­dics business to Apollo for appro­xi­m­ately USD 20 billion, as well as a poten­tial strategic transac­tion invol­ving Waystar.

Life Sciences Tools & Services rose 7.3%, conti­nuing the strong perfor­mance seen during the summer months. Positive comments at broker confe­rences confirmed the continued robust demand at the start of the third quarter. Grail and several compe­ti­tors benefited from a positive vote by an FDA advisory committee on the Galleri test for the early detec­tion of several types of cancer. However, questions regar­ding its clinical efficacy continued to be raised after­ward.

Biotech rose 0.9%, but trading was volatile. Several clinical setbacks at the begin­ning of the month weighed on senti­ment and led to a reassess­ment of acqui­si­tion poten­tial in the biotech sector by major pharmaceu­tical compa­nies. In addition, interest rate trends remained a key driver of stock prices. Support came from regula­tory progress regar­ding psyche­delic thera­peutic approa­ches for central nervous system disor­ders.

The pharmaceu­tical sector fell 2.3%. Clinical setbacks weighed on market senti­ment, parti­cu­larly follo­wing the failure of Novartis’ Phase 3 study of pelacarsen in the HORIZON-CV-Outcomes trial and that of del-desiran. These events heigh­tened sensi­ti­vity to clinical risks across the entire sector. The EASD confe­rence at the end of the month also led to increased price volati­lity.

Provi­ders & Services fell 4.2%. Drug Distri­bu­tors lost 5.0%, while Facili­ties gained 1.4%. The latter benefited from continued robust hospital commen­tary despite Health Insurance Exchange (HIX) rate headwinds. Health­care Services fell 5.6%, weighed down by the impen­ding imple­men­ta­tion of PAMA. Preli­mi­nary CMS reimbur­se­ment rates for 2027 suggest that Medicare reimbur­se­ment rates will be 16% higher than private rates. Managed Care fell 3.9%. After initi­ally supportive confirmed forecasts from Elevance and Humana, uncer­tainty surroun­ding Medicare Advan­tage ratings and future cost trends returned to the forefront.

MedTech fell 6.3%, with the weakness being widespread. Cyber­se­cu­rity incidents, opera­tional challenges, and weaker demand weighed on indivi­dual compa­nies. Boston Scien­tific cited signi­fi­cant impacts from a cyber­at­tack on its third-quarter and full-year results. Stryker reported produc­tion bottlen­ecks and weaker demand for hip repla­ce­ments, while Cooper came under pressure due to a disap­poin­ting quarter and outlook, as well as ongoing weakness in its contact lens business. Toward the middle of the month, reports of poten­tial private equity interest in J&J’s ortho­pe­dics business provided some slight support for market senti­ment.

Tareno Sustainable Health­care Fund Review

Last month, we did not estab­lish any new positions and closed our positions in Essil­or­Lu­xot­tica and Quest. In September, the fund posted a return of ‑1.8%, while the bench­mark index lost 1.8%.

The largest positive drivers of attri­bu­tion relative to the index were:

• Thermo Fisher (+18 bps): Broker upgrade and positive confe­rence comments
• Natera (+15 bps): Positive momentum in the oncology diagno­stics segment, supported by broker initia­tions and the approval of Signa­tera as a compa­nion diagno­stic for muscle-invasive bladder cancer in Japan
• Biogen (+14 bps): No signi­fi­cant company news. Stock up 4.3% in September

The largest negative drivers of perfor­mance relative to the index were:

• AbbVie ( -17 bps): Not invested
• BioMarin ( -16 bps): Discon­ti­nua­tion of Voxzogo develo­p­ment for Noonan syndrome. Rising yields also weighed on SMID-cap biotech stocks
• Stryker (-15 bps): Confe­rence call comments on ongoing supply bottlen­ecks in the vascular segment and weaker demand for large-joint products in Europe (seasonal slowdown in July and August). The Capital business remained robust, while Trauma & Extre­mi­ties continued to outper­form.

Tareno Impact Health­care Fund Review

Last month, we estab­lished a new position in Veracyte and did not close any existing positions. In September, the fund posted a return of ‑1.3%.

The largest positive contri­bu­tors were:

• Natera ( +94 bps): Positive momentum in the oncology diagno­stics segment, supported by broker initia­tions and the approval of Signa­tera as a compa­nion diagno­stic for muscle-invasive bladder cancer in Japan
• Revvity ( +59 bps): Positive confe­rence comments pointing to a pickup in demand for the new high-end instru­ment as well as a sustained recovery in spending by pharmaceu­tical and biotech compa­nies
• Hypera ( +45 bps): Launch of its own semaglutide injec­tion pen, Semavy, in Brazi­lian pharmacies. With this move, Hypera enters the market for metabolic drugs and competes with Novo Nordisk’s Ozempic

The largest negative contri­bu­tors were:

• Tandem (-93 bp): No company-specific news. Weighed down by the general weakness in the medtech sector
• Novo Nordisk ( -52 bps): Broker downgrade. The stock continued to decline follo­wing a subdued Capital Markets Day
• Abbott ( -34 bps): No company-specific news. Weighed down by the general weakness in the medtech sector