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Is Parnassus Endeavor Fund (PARWX) a Strong Mutual Fund Pick Right Now?

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Large Cap Growth fund seekers may want to consider taking a look at Parnassus Endeavor Fund (PARWX - Free Report) . PARWX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify PARWX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Parnassus is based in San Francisco, CA, and is the manager of PARWX. Parnassus Endeavor Fund made its debut in April of 2005, and since then, PARWX has accumulated about $2.24 billion in assets, per the most up-to-date date available. The fund's current manager, Billy Hwan, has been in charge of the fund since May of 2018.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 20.34%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 21.11%, which places it in the top 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. The standard deviation of PARWX over the past three years is 24.82% compared to the category average of 17.7%. Looking at the past 5 years, the fund's standard deviation is 20.24% compared to the category average of 14.51%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. PARWX has a 5-year beta of 1.22, which means it is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. PARWX's 5-year performance has produced a negative alpha of -0.16, which means 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 mostly on equities that are traded in the United States.

Right now, 83.54% of this mutual fund's holdings are stocks, with an average market capitalization of $152.78 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
Turnover is 52.77%, which means this fund makes fewer trades than its comparable peers.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PARWX is a no load fund. It has an expense ratio of 0.94% compared to the category average of 1.02%. Looking at the fund from a cost perspective, PARWX is actually cheaper than its peers.

This fund requires a minimum initial investment of $2,000, and each subsequent investment should be at least $50.

Bottom Line

Overall, Parnassus Endeavor Fund ( PARWX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on PARWXin the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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