Parnassus Value Select ETF Q1 2025 Commentary

2025-04-15 21:50:00 ET

Summary

• Parnassus Value Select ETF returned -2.06% (net of fees) for the quarter, underperforming the Russell 1000 Value Index’s 2.14%.
• The Health Care sector was the largest detractor from relative performance due to stock selection, mitigated somewhat by a favorable overweight, while stock selection in the Industrials sector lifted relative results.
• As the market sold off during the quarter, our defensive names in Health Care, our largest sector overweight, held their value and contributed to returns.
• We believe this heightened period of uncertainty should favor resilient businesses with strong market positions and create bargain opportunities that can reward long-term, patient investors.

Market Review

While U.S. equities broadly had a difficult quarter, value stocks posted a modest gain as measured by the Russell 1000 Value Index. After the new administration took office, post-election optimism regarding lower regulation and business-friendly policies gave way to the reality of restrictive fiscal policies and erratic tariff announcements creating uncertainty and recession fears. Volatility rose significantly, and investor sentiment shifted away from growth-oriented stocks—including many large technology names focused on semiconductors and/or artificial intelligence ((AI)) innovation— and toward stocks perceived as defensive. Against this risk-off backdrop, the best sector performers in the Russell 1000 Value Index were the Energy, Communication Services and Health Care sectors, while the Information Technology and Consumer Discretionary sectors performed the worst....

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