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Rating:Parnassus Oracles See Stock Gains Ahead and Changes Strategy Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, October 23, 2012

Parnassus Oracles See Stock Gains Ahead and Changes Strategy

Reported by Tommy Fernandez

In ancient Greece, Mount Parnassus was the home of the Oracle of Delphi, who had visions and made prophecies for all who would listen. The modern day Parnassus Investments [profile] wants to do the same for equities.

"A lot of investors think there is more downside in the market than upside. We still see upside in the market, especially over the long term" says Nancy Reyes, Parnassus' director of advisor relations. Although, she said, "in the short term we do think there is more downside than upside."

The firm manages five equity, and one fixed-income, strategies, which are employed both in mutual funds and separately-managed accounts. In total, the firm manages around $6.5 billion, up from roughly $1 billion seven years ago, according to Reyes.

Parnassus sees a demand for conservative strategies and for the past six months has been working on a new strategy which the firm plans to launch next year, according to Reyes. She declined to specify which asset class the strategy may cover. She says the firm takes a slow approach to project development, launching a new product roughly every eight years.

In the meantime, the firm is ramping up its distribution for its existing funds, according to Reyes, in particular via the advisor channel.

"We are focusing the majority of our resources on the platforms, the intermediaries, consultants that are now offering due diligence, and the independent advisors. We are engaging with the analysts," she said.

The 35-member firm currently has two directors and two associates who handle distribution. Reyes and Vidya Nathu handle the advisor channel, which includes RIAs, wirehouses, independent broker-dealers and family offices. Grant Cleghorn and Alexis Crusey handle the institutional channel, including retirement plans. The firm hired two analysts last year and two this year. They hope to add sales staff in the coming future.

Over the past few years, Parnassus has experienced a shift in distribution, Reyes says. Previously, retail sales accounted for as much as 80 percent of the firm's sales. Now retail accounts for roughly 45 percent, while institutional accounts for another 55 percent.

The firm is also constructing an education campaign, which includes a closed website for advisors and distributors which provides information on Parnassus' products, designed to proselytize to third parties the value of Parnassus' approach to equities.

"The key is to really understand how each channel operates and how we should reach out to them," she says. 

Correction: An October 23rd version of this story incorrectly stated Parnassus' sales staff titles, of which there are two directors and two associates. It also has no plans to hire more analysts in the future. The current percentage for Institutional sales at the firm is 55%. The institutional page of the firm's website only is focused on Parnassus-focused information.

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