HVAC: 4th Quarter 2025 Portfolio Review
Portfolio
Launched on February 3, 2025, HVAC concluded its third full quarter with continued positive momentum. In Q4 2025, the fund advanced +0.90% (NAV) / +0.88% (market), slightly lagging the S&P 500 Index, which rose +2.66% during the same interval. Since inception HVAC has gained +24.15% (NAV) / +24.13% (market) well surpassing the S&P 500 Index, up +15.56%, for the same period.
Portfolio
During the quarter, HVAC executed strategic modifications to address the evolving economic and regulatory environment. Fresh holdings were incorporated to leverage arising prospects such as:
- Bloom Energy Corp (BE): +1,184 shares
- Celestica Inc (CLS): +532 shares
- Hubbell Inc (HUBB): +358 shares
- Xylem Inc (XYL): +1,070 shares
The following positions were exited to reallocate capital toward better opportunities:
- Generac Holdings Inc (GNRC)
- Illinois Tool Works (ITW)
- Limbach Holdings Inc (LMB)
HVAC continues to stay strategically aligned, focusing on firms with resilient logistics networks and reduced exposure to trade policy-induced material expenses, all while preserving adaptability for broader economic shifts.
Winners and Losers
Certain holdings supported quarterly results, reflecting favorable market conditions alongside company-specific strengths:
- Comfort Systems USA Inc (FIX): +13.18%
- Parker Hannifin Corp (PH): +16.18%
- Graham Corp (GHM): +16.99%
Conversely, a limited number of holdings detracted from performance:
- Eaton Corp (ETN): -14.66%
- Gates Industrial Corp (GTES): -13.50%
- Trane Technologies (TT): -7.55%
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| FIX | COMFORT SYSTEMS USA INC | 10.41% |
| APH | AMPHENOL CORP-CL A | 9.20% |
| VRT | VERTIV HOLDINGS CO-A | 6.42% |
| WLDN | WILLDAN GROUP INC | 5.21% |
| PH | PARKER HANNIFIN CORP | 5.16% |
| GHM | GRAHAM CORP | 5.10% |
| ROK | ROCKWELL AUTOMATION INC | 4.73% |
| APG | API GROUP CORP | 4.34% |
| AME | AMETEK INC | 4.14% |
| JBL | JABIL INC | 4.08% |
As of 12.31.2025. Cash is not included. Holdings are subject to change.
Please see our complete Fund holdings at advisorshares.com/etfs/hvac. The holdings details are updated each market day.
HVAC & Industrials Landscape
In Q4 2025, the HVAC investment area exhibited durability and expansion possibilities despite wider economic ambiguities. Progress was propelled by innovations in eco-friendly systems, emission reduction efforts, and persistent needs from city growth and non-residential building projects such as data centers.
The worldwide HVAC market, estimated at around $299.28 billion in 2025, is forecasted to expand at a 6.4% compound annual growth rate, attaining $407.77 billion by 2030. Key catalysts include the integration of intelligent IoT capabilities (embedded sensors, software, and connectivity that enable real-time system monitoring), along with AI-driven predictive maintenance, the adoption of lower global warming potential (GWP) refrigerants in response to evolving regulations, and the exponential global expansion of data centers that require continuous, around-the-clock cooling.1
Deal-making stayed vigorous, especially in mergers and acquisitions, with tactical purchasers spearheading deals focused on green and expandable offerings. In 2025 home unit shipments declined owing to economic strains, while heat pumps persisted in leading sustainability movements, exceeding gas furnace sales by about 26% through the year, highlighting the international move to electric solutions.2
City expansion provided additional drive: over 4 billion individuals reside in metropolitan zones presently, a number expected to hit 70% of the world populace by 2050, boosting HVAC setups in home, business, and manufacturing sectors.3 Non-residential HVAC upheld robust expansion forecasts, despite home producers predicting subdued end-of-year outcomes amid elevated borrowing rates, stock accumulation, and decelerating business operations.4
Tech advancements kept influencing the field. Developments like adjustable-speed pumps, prefabricated units, and automation via AI climbed in popularity, with developing regions in Asia-Pacific and Middle East spearheading build-related advancement.5 A particularly important driver of non-residential demand, encompassing technology, is the rapid expansion of global data center infrastructure. Accelerated adoption of cloud computing, artificial intelligence, and digital storage continues to drive significant investment in hyperscale and colocation (a type of data center where equipment, space, and bandwidth are available for rental to retail customers) facilities, all of which require highly reliable, energy-efficient cooling systems operating on a 24/7 basis. Cooling can account for up to 40% of a data center’s total energy consumption, placing HVAC systems at the center of both operational reliability and cost management. As a result, data center operators are increasingly investing in advanced HVAC solutions, including liquid cooling, precision air conditioning, and intelligent thermal management to improve efficiency, reduce downtime risk, and meet sustainability targets.6
Prospects for investment revolve around energy-saving breakthroughs, AI-integrated setups, and cost-saving dependable solutions, although obstacles linger, specifically steep setup fees and policy intricacies.
Outlook
Entering 2026, we expect the HVAC sector to see stabilization, with commercial segments leading, anticipating a focus on affordability driven by tariffs and policy shifts, and growth in data centers and AI-related cooling potentially increasing demand by 30-50% in select markets.5 Challenges like labor shortages and accumulating large inventories may persist, but M&A activity should remain robust, fostering consolidation and innovation in smart, sustainable systems for long-term sector resilience.
Sources:
1. Markets and Markets. HVAC System Market. HVAC Systems Market Size, Share, Industry Growth Trends, 2030. August 2025
2. BDC. Momentum 2025. October 7th, 2025.
3. Fortune Business Insights. Heating, Ventilation, and Cooling (HVAC) Systems Regional Forecast, 2026-2034. January 5th, 2026.
4. Facilities Drive. Freedman, Robert. Strong commercial HVAC sales help Carrier offset residential weakness. October 29th, 2025.
5. The NEWS, Air Conditioning, Heating, Refrigeration. Taylor, Maria. 7 Predictions for HVAC in 2026. January 2nd, 2026.
6. IEA Paris. Energy and AI. Energy demand from AI. 2025.
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Definitions:
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Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus or summary prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
An investment in the Fund is subject to risk, including the possible loss of principal amount invested. There is no guarantee that the Fund will achieve its investment objective.
HVAC Companies Risk. HVAC companies are subject to a variety of factors that may adversely affect their business or operations, including costs associated with environmental and other regulations, the effects of an economic slowdown, surplus capacity or technological obsolescence, industry competition, labor relations, rate caps or rate changes and other factors. Certain HVAC companies may be subject to extensive regulation by various governmental authorities. The costs of complying with governmental regulations, delays or failures to receive required regulatory approvals or the enactment of new adverse regulatory requirements may adversely affect HVAC companies. HVAC companies may also be affected by service interruption and/or legal challenges due to environmental, operational or other conditions or events, and the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards. There is also the risk that corruption may negatively affect publicly-funded infrastructure projects, especially in non-U.S. markets, resulting in work stoppage, delays and cost overruns. Other risks associated with HVAC companies include uncertainties resulting from such companies’ diversification into new domestic and international businesses, as well as agreements by any such companies linking future rate increases to inflation or other factors not directly related to the actual operating profits of the enterprise. HVAC companies also can be significantly affected by the national, regional and local real estate markets.
American Depositary Receipt Risk. ADRs have the same currency and economic risks as the underlying non-U.S. shares they represent. They are affected by the risks associated with non-U.S. securities, such as changes in political or economic conditions of other countries, changes in the exchange rates of, or exchange control regulations associated with, foreign currencies, and differing accounting, auditing, financial reporting, and legal standards and practices. In addition, investments in ADRs may be less liquid than the underlying securities in their primary trading market.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual issuers, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
Holdings and allocations are subject to risks and to change.
The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.