Parnassus Core Select ETF, while slightly trailing the S&P 500's performance last quarter, is strategically adjusting its portfolio to navigate market volatility and capitalize on emerging growth sectors. The fund maintains a cautious approach with defensive holdings, alongside targeted investments in areas showing high conviction, particularly those influenced by the artificial intelligence boom. This dual strategy aims to mitigate risks while ensuring participation in significant market advancements.
During the recent quarter, the Parnassus Core Select ETF saw a return of 2.58% after fees, which was slightly below the S&P 500 Index's 2.66% gain. This performance was influenced by underperforming sectors such as Financials, Consumer Discretionary, and Materials within the fund's holdings. In response to continuous market fluctuations and uncertainties, the fund has intentionally bolstered its defensive positions. Simultaneously, it has pursued offensive strategies by investing in sectors where the management holds strong convictions about future growth.
A notable highlight of the quarter was the robust performance of Alphabet. This growth was fueled by the sustained strength of its search engine business, enhanced growth in its cloud computing division, and renewed investor confidence in its comprehensive AI strategy. Recognizing the transformative potential of AI, the Parnassus Core Select ETF views the current period as the nascent phase of a decade-long investment cycle driven by artificial intelligence. The fund is actively seeking opportunities to capture significant upside from this trend while diligently managing the inherent risks associated with rapid technological evolution.
In terms of portfolio adjustments, the Parnassus Core Select ETF introduced a new position by acquiring shares in Home Depot, a prominent retailer in the consumer discretionary sector. This move reflects the fund's dynamic approach to asset allocation, adapting to market conditions and identifying compelling investment opportunities. The fund continues to emphasize the importance of fundamental analysis and active management to select high-quality companies that are financially robust and operate sustainably, considering their human and natural resources.
The Parnassus Core Select ETF is strategically positioning itself to achieve enduring value by focusing on both risk management and growth opportunities. By balancing defensive allocations with high-conviction investments in transformative technologies like AI, the fund aims to deliver long-term returns in an evolving economic landscape.