ETF managers' portfolio changes in Q1 2023

What happened: In Q1 2023, ETF managers made notable portfolio changes. Sequoia Strategy returned 9% in Q4 2025, outperforming the S&P 500, while ClearBridge Small Cap Growth underperformed in Q4 after a strong first three quarters. Vanguard's Short-Term Corporate Bond ETF (VCSH) outperformed its Treasury counterpart (VGSH) but carried higher volatility. Schwab U.S. Dividend Equity ETF (SCHD) saw significant changes post-annual reconstitution. Kynam Capital sold over $80 million worth of Viridian Therapeutics (VRDN) shares, while Elmwood Wealth Management added to Goldman Sachs S&P 500 Premium Income ETF (GPIX). Parnassus Mid Cap Fund sold CoStar Group (CSGP), and Parnassus Investments highlighted the fund's consecutive quarter of outperformance.

Market impact: These moves indicate shifts in investment sentiment towards specific sectors and companies. The sale of VRDN shares could signal waning confidence in the biotech sector, while the addition to GPIX suggests continued interest in income-generating equities. The reconstitution of SCHD and the sale of CSGP reflect changes in dividend-focused and real estate investment strategies. The performance of VCSH relative to VGSH may influence investors' views on the risk-reward trade-off in fixed income investments.

What to watch next: Upcoming catalysts include the Q1 2023 earnings reports from companies mentioned, such as VRDN and CSGP, which will provide insights into their respective businesses and any potential impacts on the broader market. The performance of SCHD post-reconstitution will be closely watched, as will the continued interest in income-generating equities, as reflected by GPIX. Additionally, the trajectory of fixed income ETFs like VCSH and VGSH will be important to monitor, given their potential influence on investors' fixed income allocation decisions.