About the manager

Parnassus Investments is an independent and employee-owned investment management company based in San Francisco, CA. The firm seeks to invest in good businesses that have sustainable competitive advantages, increasingly relevant products or services, quality management teams and ethical business practices. Parnassus Investments believes the most attractive opportunities for investments arise when companies with good business fundamentals become temporarily undervalued. The firm’s goal is to provide value to shareholders by generating attractive risk-adjusted returns over the long-term. The firm was founded in 1984, and currently manages five fundamental, domestic, core equity funds with a value bias across multiple market capitalizations, and one intermediate government/credit fixed-income fund.

Investment philosophy

Parnassus Investments conducts fundamental research to determine a company's financial health and its business prospects, as well as the company's business ethics. A management team with good business ethics is one of the most fundamental criteria in evaluating a company; Parnassus Investments thinks it is crucial to the long-term success of a business. It also seeks to avoid investing invest in companies with significant revenue from alcohol, tobacco, gambling, weapons, nuclear power or business involvement with Sudan.

Parnassus Investments follows a responsible investment approach to understand the full impact of a company. The firm carefully considers a company’s environmental, social and governance (ESG) factors. By incorporating ESG factors into the fundamental investment process, Parnassus Investments seeks to identify risks and opportunities that the market may have ignored, and identify responsible companies.

The firm seeks to invest in companies with positive performance on ESG criteria. The ESG factors Parnassus Investments evaluates include:

• Corporate governance and business ethics
• Employee benefits and corporate culture
• Stakeholder relations
• Product, customers and the supply chain
• Environmental impact

ESG research at Parnassus Investments is dynamic, proprietary, and benchmarked against third-party sources. All members of the investment team consider ESG factors, and two team members exclusively cover ESG factors. ESG analysis is integral to the review and consideration process that each company undergoes as a new investment opportunity. In addition, Parnassus Investments reviews the ESG factors of its portfolio companies periodically throughout the year.

Investment approach

Parnassus Investments is responsible for two fund-specific approaches - Equity Income Strategy and Small Cap Strategy.

The Parnassus Equity Income Strategy is a diversified, fundamental, domestic, large-cap, core equity strategy with a value bias. The Equity Income Strategy sleeve seeks to achieve both current income and capital appreciation by investing primarily in a diversified portfolio of equity securities. At least 75% of the sleeve’s total assets will normally be invested in equity securities that pay dividends. The remaining 25% may be invested in non-dividend-paying equity securities. The Equity Income Strategy sleeve also takes environmental, social and governance factors into account in making investment decisions.

The Parnassus Small Cap Strategy sleeve is a diversified, fundamental, domestic, small-cap, core equity strategy with a value bias. The Small Cap Strategy sleeve invests principally in equity securities of companies with market capitalizations under $3 billion at the time of initial purchase that Parnassus believes are undervalued. The Small Cap Strategy sleeve seeks to invest in smaller companies with good businesses that are still developing. The Small Cap Strategy sleeve also takes environmental, social and governance factors into account in making investment decisions.

Portfolio managers

Todd C. Ahlsten, Chief Investment Officer and Portfolio Manager, Parnassus Equity Income Fund

Todd began his career at Parnassus Investments in 1994 as a research analyst. He was subsequently promoted to Director of Research in 1998 and in 2001 became Portfolio Manager for the Parnassus Equity Income Fund. He became Chief Investment Officer in 2008. Todd received his bachelor's degree in business administration from the University of California, Berkeley Haas School of Business in 1994 with an emphasis in finance and accounting.

Jerome L. Dodson, Chairman, President and Portfolio Manager, Parnassus Small Cap Fund

Jerome founded Parnassus Investments in 1984. He is the Chairman and Chief Executive Officer and is Portfolio Manager of the Parnassus Fund, Parnassus Small-Cap Fund, and Parnassus Workplace Fund. Prior to founding Parnassus Investments, he served as President and Chief Executive Officer of Continental Savings of America from 1976 to 1982, where he started the Solar T-Bill program to finance solar energy installations and also developed innovative programs to finance low- and moderate-income housing. Jerome received his bachelor's degree in political science from the University of California, Berkeley and received his master's degree in business administration from the Harvard University Graduate School of Business.

ESG commitment

Parnassus Investments conducts fundamental research to determine a company's financial health and its business prospects, as well as the company's business ethics. A management team with good business ethics is one of the most fundamental criteria in evaluating a company; Parnassus Investments thinks it is crucial to the long-term success of a business. It also avoids tobacco, alcohol, gambling, weapons and nuclear power companies.

Parnassus Investments' underlying principle when evaluating a company's corporate responsibility program is ethical business practices. This is ingrained in all aspects of a business, including how it treats its employees and customers, its environmental programs and its relationship with its community. Parnassus Investments looks for companies that are thoughtful about their impact on the environment. It recognizes that sustainable activities can increase the long-term value of a business; examples of this include attracting talented employees and minimizing risks to reputation. When Parnassus makes an investment in a company, the company represents its investors' interests to the company's management. Parnassus is most effective working with its portfolio companies as a partner, and uses this as a primary tool for engagement. Parnassus Investments also coordinates with public interest groups and other institutional investors to represent its investors' interests.

Pax World Management makes no assurance that the manner in which Parnassus Investments manages its assets in the ESG Managers™ Portfolios is the same as or entirely consistent with the manner in which it manages any of its other Funds or accounts.

Click here to access the Parnassus Investments web site

Parnassus Investments is not affiliated with ALPS Distributors, Inc. 

Funds that emphasize investments in smaller companies may experience greater price volatility.

When investing in bonds, you are subject, but not limited to, the same interest rate, inflation and credit risks associated with the underlying bonds owned by the Fund.