The Parnassus Core Select ETF (PRCS) seeks to provide long-term capital appreciation by investing in a concentrated portfolio of high-quality U.S. companies that meet strict environmental, social, and governance (ESG) criteria. This actively managed equity ETF focuses on sustainable investing while targeting competitive returns through fundamental analysis.
How It Works
PRCS employs an active management approach, with portfolio managers conducting fundamental research to select 25-40 large- and mid-cap U.S. stocks that demonstrate strong ESG practices and financial performance. The fund uses a concentrated, conviction-weighted strategy rather than market-cap weighting, allowing larger positions in the managers' highest-conviction ideas. Holdings are continuously monitored for ESG compliance and financial health, with rebalancing occurring as needed based on changing fundamentals and ESG scores.
Key Features
- Concentrated portfolio of 25-40 holdings allows for higher-conviction positioning compared to broad-market ESG ETFs with hundreds of stocks
- Active ESG screening process excludes companies involved in fossil fuels, weapons, tobacco, and other industries deemed harmful
- Recently launched in December 2024, offering investors access to Parnassus's established sustainable investing expertise in ETF format
Risks
- This ETF can lose significant value during market downturns due to its concentrated portfolio, potentially declining 40-50% in severe bear markets
- Active management and ESG screening may cause underperformance versus broad market indexes during periods when excluded sectors outperform significantly
- As a newly launched fund with minimal assets, liquidity could be limited and bid-ask spreads wider than established ETFs
Who Should Own This
Best suited for ESG-focused investors with 5+ year time horizons and medium-to-high risk tolerance who want active management in their sustainable investing allocation. Appropriate as a satellite holding representing 5-15% of total equity exposure. Ideal for investors who prioritize values-based investing alongside competitive returns and prefer concentrated, high-conviction strategies over broad diversification.