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Similar Approach, Distinct Portfolios for Parnassus Funds

We have a higher conviction in Silver-rated Parnassus Core Equity's management than in Neutral-rated Parnassus Endeavor.

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Connor Young: Silver-rated Parnassus Core Equity and Neutral-rated Parnassus Endeavor have much in common. The managers--Todd Ahlsten and Ben Allen for Parnassus Core Equity and Jerome Dodson and Billy Hwan for Parnassus Endeavor--seek firms with sustainable competitive advantages, relevant products, capable management, and ethical practices. Management buys with conviction and tends to hang on for the long term; indeed, both funds hold just 30 to 40 names and have below average portfolio turnover.

Despite the similar approach, the funds have distinct portfolios. Parnassus Core Equity has a clear quality tilt, which has helped protect against losses in down markets and dampen volatility. The fund has a Morningstar Risk rating of low. By contrast, Dodson and Hwan are less willing to pay up for quality in Parnassus Endeavor; they purchase only stocks trading at a one third discount to intrinsic value. They'll also build larger positions in high-conviction ideas. While holdings in Core Equity are capped at 5% of assets, Qualcomm and Gilead Sciences each comprised more than 10% of Endeavor's June 2018 portfolio. Dodson and Hwan's contrarian approach means Parnassus Endeavor can be an uneven ride; the fund has an above average Morningstar Risk rating.

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