We hold pure-play quality exposure to heating and cooling industries via commercial HVAC manufacturer Trane Technologies. This position reflects our conviction in the company's ability to benefit from the electrification and efficiency trends in buildings, which are critical for sustainable energy solutions. Trane Technologies is well-positioned to capitalize on the growing demand for energy-efficient HVAC systems, aligning with our broader investment strategy focused on sustainable energy.

During the second quarter, we added a new position in the Industrials sector with Trane Technologies (TT), a leading provider of heating and cooling systems, building controls, and energy-related services. In the near term, we believe that Trane will benefit from the pent-up demand after refrigerant regulations are resolved, technical, legal, and supply-chain complications are worked through, and residential inventory levels normalize. We like that Trane is a direct beneficiary of AI data center growth, which is highlighted by its inclusion in Nvidia’s reference designs for data centers. The company’s vertical product infrastructure gives it the ability to deliver system-level solutions, helping to reinforce Trane’s dominant position in the data center market. We also believe that Trane’s service revenue growth remains underappreciated, especially as the installed base of data center customers grows.

During the second quarter, we added a new position in the Industrials sector with Trane Technologies (TT), a leading provider of heating and cooling systems, building controls, and energy-related services. In the near term, we believe that Trane will benefit from the pent-up demand after refrigerant regulations are resolved, technical, legal, and supply-chain complications are worked through, and residential inventory levels normalize. We like that Trane is a direct beneficiary of AI data center growth, which is highlighted by its inclusion in Nvidia’s reference designs for data centers. The company’s vertical product infrastructure gives it the ability to deliver system-level solutions, helping to reinforce Trane’s dominant position in the data center market. We also believe that Trane’s service revenue growth remains underappreciated, especially as the installed base of data center customers grows.

Trane Technologies continued to demonstrate strong order intake for its efficient commercial cooling solutions in the US. This resilience is notable despite subdued new build activity in the US and Europe. The company is well-positioned to benefit from the ongoing energy transition, as it plays a key role in the heating and cooling industries, which are critical for energy efficiency. The demand for their products aligns with the broader trend towards sustainable energy solutions, indicating a robust growth trajectory.

Trane Technologies is a leading provider of commercial HVAC equipment and services. The HVAC industry continues to benefit from long-term structural demand, driven by rising global temperatures, improved indoor air quality standards, and a growing push for energy efficiency. We see long-term value amid recent stock pullbacks, and Trane is positioned to capitalize on these trends.

Trane Technologies, an Ireland-based HVAC supplier, was our largest addition to the portfolio. Trane has a sharp customer value proposition in both replacement and new installations as its products have improved energy efficiency meaningfully in the past five years, bringing significant energy cost savings and quick, top-quality paybacks for replacing old equipment. Avoidance of fines and penalties for non-compliance with pending energy efficiency regulations in both the U.S. and Europe are a motivation for sales while the company’s data center business is also growing at a rapid pace.

Trane Technologies (TT), an HVAC business, continues to have a strong backlog indicative of future results and order growth; however, the stock price reflected less investor optimism in their data center cooling operation.