HVAC: 2nd Quarter 2025 Portfolio Review
Portfolio
PERFORMANCE
Launched on February 3, 2025, HVAC closed its first full quarter on a strong note, overcoming early headwinds tied to escalating trade tensions and renewed industrial tariffs. In Q2 2025, the fund rose 25.82% (NAV) | 25.77% (market), significantly outperforming the S&P 500 Index, which gained 10.94% over the same period. As the quarter progressed, tariff-related pressures eased following a pause in enforcement, providing industrial companies with some much needed breathing room, just as rising summer heat drove seasonal demand higher.
PORTFOLIO
Throughout the quarter, HVAC made targeted adjustments to navigate the shifting economic and policy backdrop. New positions were added to capture emerging opportunities:
- Ferguson Enterprises Inc. (FERG): 267 shares
- Rockwell Automation Inc. (ROK): 150 shares
At the same time, the fund exited certain positions to refine its exposure and reduce sensitivity to ongoing tariff and supply chain challenges:
- Daikin Industries (DKILY)
- Graham Corp. (GHM)
- Watsco Inc. (WSO)
- Johnson Controls International (JCI)
The portfolio remains tactically positioned, emphasizing companies with robust supply chains and lower vulnerability to tariff-related input costs, while maintaining flexibility to adapt to macroeconomic developments.
WINNERS AND LOSERS
Several holdings stood out as strong contributors to performance for the quarter, benefiting from both favorable market conditions and company-specific strengths:
- Limbach Holdings Inc. (LMB) up 88.13%
- GE Vernova Inc. (GEV) up 73.47%
- Amphenol Corp. (APH) up 50.82%
On the other hand, only a few names were adversely affected by lingering tariff uncertainty and broader market weakness during the quarter:
- The AES Corp. (AES) down -13.80%
- The Middleby Corp (MIDD) down -5.25%
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| LMB | LIMBACH HOLDINGS INC | 10.21% |
| APH | AMPHENOL CORP-CL A | 7.34% |
| FIX | COMFORT SYSTEMS USA INC | 5.93% |
| AES | AES CORP | 5.90% |
| FERG | FERGUSON ENTERPRISES INC | 5.22% |
| VRT | VERTIV HOLDINGS CO-A | 4.93% |
| GEV | GE VERNOVA INC | 4.85% |
| TT | TRANE TECHNOLOGIES PLC | 4.83% |
| ROK | ROCKWELL AUTOMATION INC | 4.48% |
| GNRC | GENERAC HOLDINGS INC | 3.95% |
As of 06.30.2025. 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
The HVAC industry delivered notable growth during Q2 2025, despite lingering uncertainty around U.S. tariffs. Demand was fueled by a combination of heatwaves, infrastructure expansion, and advancing technologies, all of which are reshaping how heating, cooling, and ventilation needs are met globally.
One significant driver this quarter was the unprecedented heat wave across Europe, where cities like Paris saw temperatures soar past 100°F. In a market where only about 20% of homes currently have air conditioning, compared to roughly 90% in the U.S., these conditions underscored how cooling systems, once considered a luxury, are increasingly viewed as a necessity.1 Meanwhile, demand for sophisticated HVAC solutions continues to climb in sectors like data centers, where rapid digital infrastructure growth requires reliable, efficient cooling systems to maintain operations.
Technological innovation remains another key tailwind for the industry. The shift toward electrification and heat pumps gained momentum in commercial and residential markets alike, as these systems offer improved energy efficiency, compatibility with renewable energy sources, and the flexibility to manage heating and cooling across large buildings.2
While short-term tariff pressures persist and contribute to volatility in industrial stocks, the longer-term outlook for HVAC remains compelling. As a cornerstone of modern infrastructure, HVAC systems are integral to sustainable construction, commercial real estate development, and smart building technologies. Innovations such as geothermal heating and cooling, intelligent climate controls, and advanced filtration are not only modernizing the industry but also improving its resilience to external shocks.
Looking ahead, the fund remains focused on companies positioned to benefit from these structural growth trends, especially those demonstrating innovation, cost discipline, and supply chain resilience, while continuing to navigate an evolving trade and regulatory landscape.
1. CNN Climate. European summers are getting brutally hot. So why is air conditioning so rare? July 2, 2025.
2. LC Anderson, HVACR. Commercial HVAC Trends 2025.
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Cheers,Past Commentary
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.