Risk management is a critical aspect of how we invest at Parnassus Investments.
For our equity funds, we think the most reliable way to manage risk is at the individual
security level. We analyze the risk of permanent loss of capital for every investment
we make. We consider environmental, social, and governance (ESG) factors of our
portfolio companies to help identify additional risk. At the portfolio level, we
follow strict diversification rules, which provide an additional layer of risk management.
Risk management is a critical aspect of how we invest at Parnassus Investments.
For the Parnassus Fixed-Income Fund, we separate risk into two categories: market
and credit. Market risk includes reinvestment and duration risks, while credit risk
consists of default and credit spread risks. We determine the appropriate exposure
to both market and credit risk based on our economic and interest rates forecast.
For corporate bonds, we consider environmental, social, and governance (ESG) factors
to help identify additional risk. Under normal circumstances, the portfolio's duration
will be comparable to the benchmark, and at least 80% of the portfolio will be invested
in investment-grade securities.