Skip to Content
Fund Spy

Parnassus Investments: A Leader in Sustainable Investing

This firm's ESG offerings are worth a look.

Mentioned: , , , , , ,

Jerry Dodson founded Parnassus Investments in 1984 as a responsible investing firm. Since then, Parnassus has grown to $26.5 billion in assets under management—more than twice that of the next-largest sustainability-focused asset manager—and has become an unequivocal leader in sustainable investing. The firm’s strong investment culture and disciplined approach distinguish it from peers, even those without sustainable investing mandates. In fact, of its four funds that receive Morningstar Analyst Ratings, three are Morningstar Medalists—including Silver-rated  Parnassus Core Equity (PRBLX) and Parnassus Mid-Cap (PARMX)—signaling our conviction they will outperform their bogies over a full market cycle.

A Strong Investment Culture
From 1984 to 2001, Dodson was the sole manager for each of the firm’s funds, and he was initially the only listed manager for each fund it has since launched. But he has handed off much of his responsibility and is now a manager for just two. Still, he has kept the investment team lean at 13 members, consisting of nine managers; one analyst focused on fundamental research; and three analysts focused on environmental, social, and governance (or ESG) research. The team will also add two analysts this upcoming summer to bolster its fundamental research efforts. On the face of it, the number of analysts may seem small. The investment team’s modest size likely limits the breadth of its research, but it meets this challenge with significant collaboration among its managers, who run focused, low-turnover portfolios. In fact, the similarity among the January 2018 holdings of the firm’s four U.S. equity funds illustrates this combined effort, as shown in the table below. For example, the most similar portfolios are large-blend siblings Parnassus and Parnassus Core Equity, which have a common-holdings score of 40% (this metric accounts for both the number of stocks held in common and their respective portfolio weights).

Andrew Daniels does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.