The Parnassus Value Select ETF (PRVS) seeks to provide long-term capital appreciation by investing in undervalued U.S. stocks that meet specific environmental, social, and governance (ESG) criteria. This value-focused equity ETF targets companies trading below their intrinsic value while maintaining sustainable business practices.
How It Works
PRVS employs an actively managed approach combining traditional value metrics with ESG screening to select approximately 30-50 U.S. stocks. The fund's managers analyze companies using price-to-earnings ratios, price-to-book values, and free cash flow yields while excluding businesses involved in tobacco, weapons, or fossil fuels. Portfolio rebalancing occurs quarterly based on valuation changes and ESG assessments, with position sizes typically ranging from 1-5% of assets.
Key Features
- Combines value investing discipline with ESG screening, offering sustainable exposure to undervalued companies often overlooked by traditional value funds
- Concentrated portfolio of 30-50 carefully selected holdings allows for meaningful position sizes and potential alpha generation through active management
- Recently launched with 0.00% expense ratio, though this promotional rate will likely increase after the initial period ends
Risks
- This ETF can lose value if value stocks continue underperforming growth stocks, as seen in recent years when value strategies lagged significantly
- Concentrated portfolio with fewer than 50 holdings creates higher single-stock risk compared to diversified index funds, amplifying individual company impacts
- Value investing can experience prolonged periods of underperformance during growth-favoring markets, potentially lasting multiple years as witnessed 2010-2020
Who Should Own This
Best suited for investors with 3-7 year time horizons seeking ESG-conscious value exposure as a satellite holding (10-25% of equity allocation). Requires medium-to-high risk tolerance due to value strategy volatility and concentration risk. Ideal for those believing value stocks will eventually outperform after recent underperformance cycles.