Is Parnassus Investor (PARNX) a Strong Mutual Fund Pick Right Now?

view original post

Have you been searching for a Mutual Fund Equity Report fund? You might want to begin with Parnassus Investor (PARNX). PARNX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Parnassus is based in San Francisco, CA, and is the manager of PARNX. Since Parnassus Investor made its debut in May of 1985, PARNX has garnered more than $2.47 billion in assets. The fund is currently managed by Ian Sexsmith who has been in charge of the fund since May of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. PARNX has a 5-year annualized total return of 5.08% and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 4.98%, which places it in the bottom third during this time-frame.

When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, PARNX’s standard deviation comes in at 21.27%, compared to the category average of 19.24%. The fund’s standard deviation over the past 5 years is 18.68% compared to the category average of 16.96%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.03, so investors should note that it is hypothetically as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a negative alpha of -7.32, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

As of the last filing date, the mutual fund has 79.55% of its assets in stocks, with an average market capitalization of $35.98 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Retail Trade

Turnover is 28.73%, which means this fund makes fewer trades than its comparable peers.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PARNX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 0.99%. PARNX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $2,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, Parnassus Investor ( PARNX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Parnassus Investor ( PARNX ) looks like a somewhat average choice for investors right now.

Don’t stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PARNX to its peers as well for additional information. And don’t forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research