Parnassus Core Select ETF Q4 2025 Performance, Strategy, and Outlook

The Parnassus Core Select ETF delivered steady, positive results in the fourth quarter of 2025, gaining 2.58% net of fees during the period. While this performance was slightly below the return of the broader S&P 500 Index, which rose approximately 2.66%, it reflected the fund’s continued focus on quality stocks and risk management in volatile markets.

Quarterly Results and Market Comparison

During Q4 2025, the Parnassus Core Select ETF posted a positive return, though it marginally underperformed the S&P 500 benchmark. The modest difference in performance was influenced by sector exposure and the fund’s investment approach, which leans toward defensive positioning when market uncertainty rises.

Sector Performance Contributions

Some sectors in the portfolio, such as Financials and Materials, were weaker contributors relative to the overall U.S. equity market. These underperformances slightly weighed on the overall quarterly return. Meanwhile, other areas driven by more resilient growth showed better performance, helping offset weaker sectors.

Investment Strategy and Portfolio Positioning

The fund’s managers continued to emphasize high-quality companies with strong fundamentals and long-term growth potential. Rather than aggressively chasing short-term gains, the strategy focused on balancing risk with opportunity. In particular, the fund held an overweight position in defensive assets to manage volatility and preserve capital in uncertain market conditions.

New Additions and Exits

During the quarter, the fund added Home Depot, a large home-goods and retail company, highlighting confidence in consumer discretionary stocks that appear positioned for resilient demand. The fund also exited some previous holdings to rebalance the portfolio and adjust to market dynamics.

Performance Drivers: Technology and Growth Leaders

One of the notable contributors to performance was Alphabet, the parent company of Google. Strong revenue growth in its core search business, expanding cloud services, and progress in artificial intelligence initiatives helped lift the stock’s performance. Such technology and innovation leaders continue to be key parts of the fund’s holdings.

Forward Outlook and Expectations for 2026

Looking ahead, the commentary from fund analysts suggests possible continued growth in equity markets in 2026, with expectations for broadening market participation and double-digit returns in the S&P 500. As markets evolve, the fund will seek to capture opportunities while managing risk, particularly where secular growth trends are strongest.

Part of the long-term strategy includes positioning for emerging investment themes, such as the ongoing development and integration of artificial intelligence and related technologies. Fund managers believe the ETF may be in the early stages of a broader multi-year investment cycle centered around innovation, which could provide substantial opportunities if risks are handled prudently.

Balancing Risk and Conviction

Active management remains at the core of the fund’s approach, with careful evaluation of individual stocks and sectors. This focus on high-quality, financially strong companies that align with sustainability criteria fits the fund’s overall objectives and reflects the investment philosophy that long-term value can be built while managing downside risk.

Summary of Key Insights

• The fund posted solid positive performance in Q4 2025, with a net return of 2.58%.
• It slightly trailed the S&P 500 index but stayed focused on risk control and quality holdings.
• Portfolio shifts included adding Home Depot and adjusting defensive exposures.
• Technology and growth companies like Alphabet played an important role in performance.
• Outlook for 2026 suggests continued optimism with careful risk management in an active portfolio.

Conclusion

The fourth quarter of 2025 highlighted the Parnassus Core Select ETF’s commitment to long-term investment principles, active management, and balancing performance with prudent risk strategies. While slightly underperforming a broad market benchmark, the fund’s focus on quality stocks and diversification positions it to potentially benefit from future market trends and economic cycles.

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