Parnassus Investments, a leader in sustainable investing, launched two fully transparent, active exchange-traded funds on Dec. 12, 2024. The ETFs are more focused versions of established strategies.

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Parnassus Core Select ETF PRCS is similar to the firm’s highly rated flagship fund Parnassus Core Equity PRBLX. It shares the same management team of Todd Ahlsten, Ben Allen, and Andrew Choi. That group selects stocks from Core Equity’s portfolio, though the ETF is a more concentrated version, holding roughly 25 stocks. On Dec. 13, the ETF had 27 holdings, less than the 40 in Core Equity’s November portfolio.

The firm also launched Parnassus Value Select ETF PRVS, a version of Parnassus Value Equity PARWX. Managers Billy Hwan and Krishna Chintalapalli run the mutual fund and ETF. Value Select is a more concentrated version of Value Equity, holding 27 stocks on Dec. 13 to Value Equity’s 45 as of November.

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The ETFs are not subject to the SEC’s diversification rules and can hold more assets in a select number of holdings. For example, Parnassus Core Select ETF’s stakes of 9.0% in Microsoft MSFT and 8.2% in Amazon.com AMZN are larger than the mutual fund’s 6.6% and 6.0% allocations, respectively.

The ETFs don’t just exclude the funds’ lower-conviction picks, though. Parnassus Core Select ETF and Parnassus Core Equity weight several names they hold in common differently. The mutual fund has 2.5% in Apple AAPL, while the ETF allocates 5.0% to the iPhone maker. Fiserv FI is the mutual fund’s 11th largest holding at 2.9%, but the financial-services software company lurks near the bottom of the ETF’s portfolio with a 2.0% allocation.

Both ETFs’ fees are competitive with their corresponding mutual funds’ institutional share class. Parnassus Core Select ETF’s 0.58% expense ratio is 3 basis points below the 0.61% of Parnassus Core Equity’s institutional shares and well below the investor shares’ 0.82%. Parnassus Value Select ETF’s 0.59% expense ratio is 6 basis points cheaper than the 0.65% of Parnassus Value Equity’s institutional shares.