GK: 1st Quarter 2026 Portfolio Review
Commentary
The first quarter of 2026 started positively but turned sharply when conflict with Iran escalated. The sudden rise in geopolitical risk pushed oil prices higher and created significant uncertainty, which drove broad market volatility. Given our exposure to technology and AI, several of our positions were hit harder than the overall market, and the fund declined -7.85% (NAV) | -7.89% market in Q1.
Importantly, as we moved into April, markets recovered following a ceasefire, and we have already recaptured these losses.
Macro Backdrop and Positioning
At the start of the year, we expected a constructive environment with moderating inflation, lower rates, and strong year-over-year earnings growth. The conflict disrupted those assumptions. Higher energy prices have increased inflationary pressure and lifted costs across the economy, while long-term rates moved higher. As a result, we no longer expect additional rate cuts this year.
We believe the Iran conflict is transitioning from an active phase toward a more contained “cold conflict” posture, with ongoing focus on trade security around the Strait of Hormuz. Higher oil prices benefit parts of the energy complex (including certain clean energy exposures), but they can also pressure consumer spending.
Despite the volatility, U.S. economic activity has remained resilient, and the AI investment cycle continues to move forward. We are increasingly focused on AI infrastructure, power, and select areas of the economy that can perform in a higher-rate, higher-volatility environment.
Portfolio Actions in Q1
To better align the portfolio with the risk and reward landscape for 2026, we made several changes.
Positions Sold or Exited
- Blackstone Inc. (ticker: BX): We reduced risk given its exposure to private market valuations and a more uncertain macro environment.
- iShares Bitcoin Trust ETF (ticker: IBIT): We took profits and exited as risk appetite shifted and the asset added volatility without improving expected returns.
- iShares Gold Trust (ticker: IAU): (reduced) After strong gains, we took the majority of profits and maintained only a smaller position. One advantage of the ETF structure is the ability to make these adjustments efficiently without distributing capital gains to shareholders.
- Oracle Corp. (ticker: ORCL): We redeployed from Oracle given rising investment demands and increased uncertainty around strategic commitments, preferring other AI opportunities.
- SoundHound AI Inc. (ticker: SOUN): We exited after continued underperformance and a more competitive landscape for voice and AI agent solutions
Risk Management
We moved to a more conservative posture and increased cash to approximately 5%, the highest level for the fund, to create flexibility and prepare for continued market volatility in Q2 and Q3.
New Positions Added
- Bloom Energy Corp. (ticker: BE): A higher-risk, higher-upside way to gain exposure to the growing power bottleneck driven by data center expansion.
- Micron Technology Inc. (ticker: MU): We believe memory is one of the most constrained areas of the AI supply chain. Micron’s valuation was compelling, and it has become a top ten position.
- Sterling Infrastructure Inc. (ticker: STRL): A focused infrastructure company benefiting from data center build-outs and related construction demand.
- Quest Diagnostics Inc. (ticker: DGX): A high-quality healthcare franchise with durable demand for diagnostic testing, complementing our existing healthcare exposure led by Eli Lilly.
- FirstCash Holdings Inc. (FCFS): A unique inflation-resilient business with strong demand from consumers seeking short-duration, collateralized credit in a higher-rate environment.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| NVDA | NVIDIA CORP | 8.31% |
| GOOG | ALPHABET INC | 8.27% |
| LLY | ELI LILLY & CO | 7.14% |
| AVGO | BROADCOM INC | 6.65% |
| GEV | GE VERNOVA INC | 6.04% |
| TT | TRANE TECHNOLOGIES | 4.75% |
| NFLX | NETFLIX INC | 4.59% |
| PWR | QUANTA SERVICES INC | 4.13% |
| AAPL | APPLE INC | 4.09% |
| MSFT | MICROSOFT CORP | 4.08% |
As of 03.31.2026. Cash is not included. Holdings are subject to change.
Outlook
The second quarter has started very strong. With the ceasefire in place and earnings season underway, we continue to expect solid corporate results and ongoing investment in technology. While consumers remain active, we believe investors should expect higher volatility and potentially lower overall market returns this year given inflation uncertainty, higher rates, and policy-driven variability.
We are pleased with performance over the last 12 months through March, with the fund up +21.33% (NAV) | +21.27% market, and we remain constructive on equities. As always, we will take action to protect the portfolio if conditions deteriorate.
Thank you for your continued trust and support. We look forward to a strong remainder of 2026.
Regards,
Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager
Past Manager Commentary
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