HVAC: 1st Quarter 2026 Portfolio Review
Portfolio
The AdvisorShares HVAC and Industrials ETF (HVAC) wrapped up its fourth full quarter following its launch in February of ’25 with continued strong momentum. In the first quarter of 2026, the fund returned +10.40% (NAV) / +10.36% (market). This stood in clear contrast to the S&P 500 Index, which fell -4.33% during the period. Since inception, HVAC has gained +31.43% (NAV) / +31.38% (market), while the S&P 500 Index gained only +9.08%, for the same period.
Portfolio
During the quarter, HVAC made targeted adjustments to the portfolio opportunities.
The following new positions were added:
- BWX Technologies Inc. (BWXT): +1,874 shares
- Belden Inc. (BDC): +2,324 shares
- Curtiss-Wright Corp. (CW): +394 shares
- Flowserve Corp. (FLS): +4,940 shares
- Fortive Corp. (FTV): +4,618 shares
- Legence Corp. (LGN): +5,738 shares
- Sterling Infrastructure Inc. (STRL): +732 shares
Positions were re-entered in:
- Dover Corp. (DOV): +1,242 shares
- Fluor Corp. (FLR): +6,750 shares
- Illinois Tool Works (ITW): +817 shares
- Jabil Inc. (JBL): +1,414 shares
- Mastec Inc. (MTZ): +784 shares
The following positions were removed during the quarter:
- AES Corp. (AES)
- Carrier Global Corp. (CARR)
- Celestica Inc. (CLS)
- Ferguson Enterprises Inc. (FERG)
- Graham Corp. (GHM)
- Lennox International Inc. (LII)
- Rockwell Automation Inc. (ROK)
- Veralto Corp. (VLTO)
- Xylem Inc. (XYL)
- Eaton Corp. (ETN)
- Gates Industrial Corp. (GTES)
- Johnson Controls International (JCI)
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.
- Comfort Systems USA Inc. (FIX): +47.84%
- Vertiv Holdings Co. (VRT): +54.71%
- Bloom Energy Corp. (BE): +55.93%
At the same time, a small number of positions detracted from returns.
- Willdan Group Inc. (WLDN): -26.14%
- Amphenol Corp. (APH): -6.33%
- Belden Inc. (BDC): -5.91%
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| FIX | COMFORT SYSTEMS USA INC | 5.87% |
| BWXT | BWX TECHNOLOGIES INC | 5.09% |
| JBL | JABIL INC | 4.99% |
| FLS | FLOWSERVE CORP | 4.83% |
| GEV | GE VERNOVA INC | 4.64% |
| APH | AMPHENOL CORP-CL A | 4.49% |
| VRT | VERTIV HOLDINGS CO-A | 4.43% |
| LGN | LEGENCE CORP-CL A | 4.31% |
| FLR | FLUOR CORP | 4.19% |
| STRL | STERLING INFRASTRUCTURE INC | 3.96% |
As of 03.31.2026. 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
Things became more challenging in late February and March when conflict in the Middle East drove oil prices sharply higher, up more than 70% for the quarter. The spike added volatility and pulled investor attention toward energy and defensive areas.
Even so, HVAC companies with ties to data centers, commercial construction, and energy efficiency solutions stayed well positioned. The underlying demand for better cooling infrastructure continues to build momentum.
The six largest U.S. hyperscalers are planning to invest more than $593 billion in 2026, a 45% increase from the already record levels seen in 2025.¹ Much of that capital is flowing into cooling systems, precision air conditioning, and liquid cooling for their facilities. Data center cooling needs alone are projected to grow from $21 billion in 2026 to $54 billion by 2034, at a compound annual growth rate of 12.6%. ² Beyond the sheer volume, the story involves a technology shift. As AI increases power demands per rack dramatically—from the traditional 4–10 kW range toward 100 kW and higher, older air-based cooling systems are giving way to liquid cooling, hybrid setups, and more sophisticated airflow designs. These upgrades can reduce a facility’s power usage by around 15%. ³
Commercial and industrial construction provided additional support. Manufacturing activity picked up, with the ISM Manufacturing Index moving into expansion territory in February and holding steady in March. ⁴ Non-residential projects and energy-efficiency retrofits also helped maintain demand.
On a broader scale, the global HVAC market, valued at roughly $299 billion in 2025, is projected to reach $408 billion by 2030, growing at a 6.4% compound annual rate. Smarter IoT-enabled equipment, AI-based predictive maintenance, and refrigerants with lower environmental impact are among the key factors. ⁵
Some challenges surfaced too, the oil price surge renewed inflation worries and pushed bond yields higher, raising questions about the timing of any Federal Reserve rate adjustments. Higher borrowing costs tend to weigh on residential construction and can delay some commercial work. Skilled labor shortages in trades like HVAC technicians, electricians, and welders remained an issue as data center builds compete for the same workforce. Supply chain pressures connected to the Middle East developments also created some delivery uncertainties.
Outlook
As Q2 begins, several longer-term trends continue to shape the HVAC sector. Significant capital commitments from hyperscalers in data center development provide visibility for many suppliers of thermal management systems. Commercial and institutional retrofits remain active, while residential demand may face more pressure if mortgage rates stay elevated. The effects of higher oil prices on inflation and interest rates will be important to watch, though many of the sector’s primary growth drivers are tied to multi-year infrastructure investments. M&A activity has stayed active, as companies look to expand their reach in specialized data center cooling and the fragmented service and maintenance business.
Sources:
1. Bloomberg Intelligence. Data Centers Power HVAC Growth. February 5th, 2026.
2. Fortune Business Insights. Data Center Cooling Market Report. 2026.
3. The Network Installers. Data Center Energy Consumption Statistics. January 12th, 2026.
4. Coastal Bridge Advisors. 1Q 2026 Recap & 2Q 2026 Outlook. April 2026.
5. Markets and Markets. HVAC System Market. August 2025.
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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.