Healthcare ETF Quarterly Report | July 2026

Health Care ETF Market in review

Health Care sentiment shifted meaningfully over the course of the second quarter. Biopharma’s momentum, which had cooled in the first quarter as investor attention rotated toward artificial intelligence, reasserted itself sharply in the back half of the quarter, particularly through the month of June, as a wave of M&A activity and positive clinical data presentations drew technology-oriented capital back into the sector. The Russell growth indices’ annual reconstitution also lifted biopharma’s weight within the health care benchmarks, amplifying the sub-industry’s influence on relative performance heading into the third quarter.

Biotechnology was again the standout performer, though leadership within the rally was notably narrow and concentrated in the more speculative, non-earning corner of the group, a dynamic that stands in contrast to our process’s longstanding preference for commercial-stage, earnings-generating biopharma. Medical technology remained the weakest area of the sector for a second consecutive quarter, weighed down by idiosyncratic issues among several large-cap bellwethers and lingering uncertainty over whether softer procedure volumes reflect a transient or more structural trend, though valuations have compressed to levels we consider increasingly attractive. Health care distributors, which we view as a defensive subsector insulated from broader macro and geopolitical crosscurrents, continued to benefit from steady prescription volume growth and GLP-related tailwinds.

We remain constructive on Health Care overall, and our conviction in biopharma across the market-cap spectrum remains strong. The quarter’s rally was a reminder that the sub-industry can move quickly once sentiment turns, and while a portion of that move was concentrated in lower-quality names that sit outside our process, we believe the underlying drivers remain firmly in place: improving M&A conditions, a more accommodative regulatory backdrop, and a maturing group of commercial-stage companies with genuine standalone growth prospects.

Portfolio Performance

During the quarter, the Harbor Health Care UCITS ETF (the “portfolio”) returned +13.82% (gross, preliminary), underperforming the Russell 3000 Growth Health Care Index (the “index”), which returned +15.17%. Strong stock selection within Biotechnology was outweighed by relative weakness within Pharmaceuticals and MedTech. The following discussion reflects relative performance from the representative account.[1]

Quarter performance – contributors and detractors

Biotechnology:

Biotechnology was the largest contributor to relative performance during the quarter, with strong stock specific returns from several holdings driven by clinical data catalysts and M&A activity. The M&A environment for biopharma assets with established commercial franchises remains unusually favourable, and we believe the portfolio’s emphasis on commercial-stage biopharma along with innovative, quality earlier stage companies is well-positioned to participate in continued consolidation.

• Legend Biotech Corp. (LEGN) was the top contributor ((+3.06pp portfolio contribution), as shares advanced on a positive early-stage CAR-T data readout for LB2501 alongside continued strong commercial execution for CARVYKTI, its approved multiple myeloma therapy, which again posted net trade sales ahead of consensus during the quarter. We continue to view the company as a share-taking leader in a fast-growing market.
• Revolution Medicines, Inc. (RVMD), a clinical-stage oncology company developing targeted therapies for RAS-driven cancers, was a notable contributor (+2.87pp portfolio contribution). Shares advanced following positive clinical data and favourable competitive safety comparisons. We maintain conviction in the company’s platform and continue to hold the position ahead of a pivotal pancreatic cancer data readout expected later this year.
• Ascendis Pharma A/S (ASND), the portfolio’s largest biotechnology holding, contributed +1.6pp during the quarter as Yorvipath commercial momentum continued and additional long-term growth hormone data reinforced the durability of the franchise; we continue to view the company as a high-quality earnings compounder.
• Insmed Incorporated (INSM), a commercial-stage biopharmaceutical company focused on rare disease therapies, declined -2.2pp on investor concern around treatment discontinuation rates for its lead rare disease therapy, which we believe is overblown given the company’s intact commercial trajectory. We added to the position during the quarter.
• Vaxcyte, Inc. (PCVX), a clinical-stage biotechnology company developing vaccines for infectious disease, was a detractor during the quarter, falling -0.52pp. Shares came under pressure after management’s commentary was interpreted as tempering expectations ahead of a year-end Phase 3 data readout, compounded by investor concern over competitive dynamics. We trimmed the position to manage risk but continue to view the vaccine candidate’s broad serotype coverage favourably heading into the data.[2]

MedTech:

• Our underweight position in Intuitive Surgical, Inc. (ISRG) proved defensive (4.28% average weight vs 6.29% for the benchmark), as shares declined sharply amid broader pressure on medical technology valuations tied to concerns over slowing procedure volumes, a theme that weighed on large-cap bellwether names across the sub-industry during the quarter.
• Boston Scientific Corporation (BSX), a diversified medical device manufacturer, was a detractor (-0.9pp) from relative results as shares lagged amid the broader pressure on medical technology valuations described above.

Health Care Providers & Services:

• UnitedHealth Group Incorporated (UNH) advanced (+1.62pp) after the Centers for Medicare & Medicaid Services’ calendar year 2027 Medicare Advantage rate update came in well ahead of expectations, a tailwind for managed care broadly; we continue to hold the position.
• GeneDx Holdings Corp. (WGS), a leader in genetic testing for rare diseases and paediatrics, declined further after a difficult prior quarter, pressured by continued concern around pricing and reimbursement dynamics within its genomic testing business. We decided to exit the position during the quarter as our conviction in the business model viability started to waver.

Pharmaceuticals:

• Pharmaceuticals was the largest detractor from relative performance during the quarter driven by our underweight exposure to Eli Lilly and Company (LLY), the benchmark’s largest constituent by a wide margin. Shares outperformed driven by continued execution across its obesity and diabetes franchise. While we continue to view Eli Lily as the best positioned player in the GLP-1 market, supported by strength of weight loss data and longer IP duration relative to Novo Nordisk, we remain underweight relative to the index weight of over 45%. We continue to believe that GLP-1 remains one of the most powerful product cycles in global pharma with a long runway ahead.

Buys & Sells:

During the quarter, we benefitted from M&A activity in and sold our position in Nuvalent, Inc., an oncology-focused biopharma company following the announcement that GKS would be acquiring the company.

We also exited our position in GeneDx Holdings Corp. (WGS), a leader in genetic testing for rare diseases and paediatrics, that has been pressured by continued concern around pricing and reimbursement dynamics within its genomic testing business. We decided to exit the position during the quarter as our conviction in the business model viability started to waver.

We rotated the capital into biopharma names across the capitalisation spectrum, including Relay Therapeutics, a clinical stage biopharma company with assets targeting both oncology and vascular conditions.

Industry Overweights & Underweights:

Entering 2026, the Biotechnology industry represented the largest overweight relative to the index, and it remains the largest overweight as of 30/06/2026. We continue to view Biotechnology as the most attractive area within Health Care, with exposure spread across both commercial-stage and development-stage names. Within the group, we are underweight more speculative and non-earning earlier stage names, which face disproportionate pressure from rising rates. M&A remains a tailwind, with large-cap pharma paying substantial premiums for commercial-stage assets.

The Pharmaceuticals industry represented the portfolio’s largest underweight as of year-end and continues to be the largest underweight as of 30/06/2026. We continue to believe that the industry includes many interesting opportunities, and the industry represents a large absolute weight in the portfolio, however we remain underweight given our focus on risk-adjusted opportunities within the industry.

Macro Outlook

Heading into the third quarter, we see the M&A backdrop for biopharma as even more favourable than it was earlier in the year. The pipeline needs of large pharmaceutical companies are becoming more acute as patent cliffs draw closer, and that urgency is translating into real capital commitments, supported by an accommodative FDA and FTC posture. Importantly, the improving path to standalone commercialisation means the portfolio is less reliant on deal activity to realise value in many of its biopharma holdings, giving us confidence in the underlying thesis whether or not a given name is ultimately acquired. We expect continued deal flow, concentrated in the areas of greatest need for large pharma: oncology, immunology, and rare disease.

Biotechnology remains our highest-conviction sub-industry, but after such a rapid move, we are inclined to add to positions on pullbacks rather than chase strength at current levels. We continue to favour a balance of

mature, commercial-stage compounders alongside select development-stage names with near-term data catalysts, while maintaining discipline against the unprofitable, non-earning biotech cohort that drove much of the quarter’s more speculative gains and that we believe remains vulnerable if the macro backdrop turns less accommodative. Within pharmaceuticals, we continue to see more differentiated innovation in biotech than in the broader pharma group and remain selective, favouring the handful of large-cap names with genuine organic growth drivers over those more reliant on acquired growth to offset patent expirations.

We are becoming incrementally more constructive on medical technology following its extended period of underperformance and valuation compression, and are beginning to selectively add exposure to names we believe have been overly punished for what look like idiosyncratic, rather than structural, issues. We continue to view distributors as an attractive defensive complement within the sector. We are also monitoring the growing use of artificial intelligence in drug discovery and molecule optimisation across the industry, which we believe should improve the long-term probability of success and investability of biopharma research and development, even though we remain cautious about underwriting pure-play AI-adjacent stories directly given the difficulty in isolating true differentiation.

Key risks

• Past performance is not indicative of future performance.
• The Sub-Fund’s assets will be actively managed by the investment manager who will have discretion to invest assets to achieve the investment objective. There is no guarantee that the Sub-Fund’s investment objective will be achieved based on the investments selected.
• Biotechnology Investment Companies in the biotechnology industry could be adversely affected by (without limitation) the following factors Patent considerations, intense competition, rapid technological change, obsolescence of products and/or services and government regulation. Also, companies in the biotechnology industry may exhibit substantial price fluctuations in their stock price.
• When you invest in ETFs your capital is fully at risk and may not get back the amount originally invested.
• Exchange rates can have a positive or negative effect on returns.
• The value of equities and equity-related securities can be affected by daily stock and currency market movements.
• For a complete overview of all risks, please see the Prospectus

Active Healthcare ETF Performance Table   

As of 30.09.2026

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30.09.2026

Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

[1] Source: Westfield, FactSet. Data as of 30.06.2026

[2] Ibid