How We Invest

Risk Management

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.