HVAC: 2nd Quarter 2026 Portfolio Review
Portfolio
The AdvisorShares HVAC and Industrials ETF (HVAC) delivered another strong quarter, returning +22.56% (NAV) / +22.91% (market) in Q2 2026. That compares to a +15.20% gain for the S&P 500 Index over the same period. Since inception on February 3, 2025, HVAC has returned +44.74% (NAV) / +44.98% (market), against +18.81% for the S&P 500 Index over the same period.
Portfolio
HVAC made continued targeted adjustments to the portfolio during the second quarter.
The following new positions were added:
- Caterpillar Inc. (CAT): +770 shares
- Generac Holdings Inc. (GNRC): +2,392 shares
- Quanta Services Inc. (PWR): +1,052 shares
- Nvent Electric (NVT): +1,603 shares
Positions were re-entered in:
- AAON Inc. (AAON): +5,680 shares
- GE Vernova Inc. (GEV): +616 shares
The following positions were removed during the quarter:
- API Group Corp (APG)
- BWX Technologies Inc. (BWXT)
- Dover Corp. (DOV)
- Flour Corp. (FLR)
- Flowserve Corp. (FLS)
- Hubbell Inc. (HUBB)
- Illinois Tool Works (ITW)
- Parker Hannifin Corp. (PH)
- SPX Technologies Inc. (SPXC)
- Smith (A.O.) Corp. (AOS)
These continued adjustments reflect our ongoing focus on companies best positioned to benefit from the buildout of data center cooling infrastructure, alongside core industrial names with exposure to broader commercial and institutional construction activity.
Winners and Losers
Several holdings contributed positively to the fund’s performance this quarter, helped by supportive conditions in their markets and solid company-specific results:
- Sterling Infrastructure Inc. (STRL): +106.09%
- Comfort Systems USA Inc. (FIX): +43.78%
- Bloom Energy Corp. (BE): +123.41%
At the same time, a small number of positions detracted from returns.
- AAON Inc. (AAON): -2.54%
- BWX Technologies Inc. (BWXT) which was removed from the portfolio: -9.54%
- Flowserve Corp. (FLS) which was removed from the portfolio: -4.48%
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| STRL | STERLING INFRASTRUCTURE INC | 8.63% |
| FIX | COMFORT SYSTEMS USA INC | 7.18% |
| JBL | JABIL INC | 5.98% |
| APH | AMPHENOL CORP-CL A | 5.48% |
| CAT | CATERPILLAR INC | 5.02% |
| VRT | VERTIV HOLDINGS CO-A | 4.89% |
| CW | CURTISS-WRIGHT CORP | 4.82% |
| TT | TRANE TECHNOLOGIES PLC | 4.82% |
| BE | BLOOM ENERGY CORP- A | 4.79% |
| NVT | NVENT ELECTRIC PLC | 4.67% |
As of 06.30.2026. 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
The data center cooling story that supported HVAC‘s Q1 results continued to build through Q2. Hyperscaler capital spending on AI infrastructure remains on an aggressive trajectory, with total 2026 buildout estimates in the hundreds of billions of dollars, and non-hyperscaler demand from AI cloud builders and enterprises now approaching parity with traditional hyperscaler demand. The underlying driver remains the same: newer GPU architectures are pushing rack power densities well beyond what traditional air-cooling systems can handle efficiently, accelerating the shift toward direct-to-chip liquid cooling, immersion cooling, and hybrid thermal management approaches across the industry.
Beyond data centers, broader industrial and manufacturing conditions remained supportive, aided by the quarter’s overall risk-on tone and improving sentiment around capital spending. Commercial construction and infrastructure investment continued to provide a steady demand backdrop for many of the fund’s holdings.
Outlook
As we move into Q3 2026, HVAC’s positioning remains firmly in place. Hyperscaler and broader AI infrastructure capital spending continues to provide multi-year visibility for thermal management and cooling infrastructure suppliers, and the shift toward liquid and hybrid cooling technologies as rack densities rise remains an early-stage trend rather than a mature one. We’ll continue to watch for how the market’s broadening participation beyond mega-cap technology affects sentiment toward the industrial and infrastructure names that make up the fund, and we expect to continue making active adjustments to the portfolio as opportunities in specialized data center cooling and adjacent industrial segments evolve.
A longer-term demand driver also came into sharper focus this quarter: Europe’s historically low air conditioning penetration. Record-breaking heat waves swept across the UK, France, Spain, Germany, and other parts of the continent in May and June 2026, with temperatures running as much as 15°C above seasonal norms in some regions. Air conditioning remains present in only around one-fifth of European households, compared to roughly 90% in the U.S., and the resulting scramble for cooling equipment drove a sharp spike in demand, most of it currently met by Asian manufacturers rather than the U.S.-listed names in HVAC‘s portfolio. Even so, we see this as an early signal of a structural, multi-year shift already underway: as European summers grow hotter and AC adoption climbs from such a low base, we expect the addressable market for cooling equipment, controls, and related infrastructure to expand meaningfully over time, a trend we will continue to monitor for portfolio relevance as it develops.
Sources:
1. AL Capital Advisory. AI Capex Cycle 2026: $725B Hyperscaler Buildout — CFA Analysis. May 2026.
2. Nasdaq, Market Intelligence Desk. June, Second Quarter 2026 Review and Outlook. July 2026.
3. Adam Silva Consulting. Data Center Cooling Economics 2026: Liquid vs Air vs Immersion. May 2026.
4. CNN. European summers are getting brutally hot. So why is air conditioning so rare? 2026.
5. World Resources Institute. Europe’s Soaring Heat and the Great Air Conditioning Dilemma. Updated June 30, 2026.
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Past Commentary
The ISM Manufacturing Index, or Purchasing Managers’ Index (PMI), is a monthly economic indicator tracking U.S. manufacturing health based on surveys of supply executives. A reading above 50 signals expansion, while below 50 indicates contraction. Often called the PMI, Manufacturing ISM Report On Business, or simply the ISM Survey, it serves as a leading indicator of GDP and market trends
The compound annual growth rate is the annual rate of return that shows how an investment grows from its beginning value to its ending value over time, assuming reinvested profits.
The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index.
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.