Parnassus Investments, the largest pure-play ESG fund manager in the U.S., is being acquired by Affiliated Managers Group (AMG), a global partner and investor in independent partner-owned asset management firms. The majority equity interest will add approximately $47 billion in ESG assets, bringing AMG’s ESG-dedicated assets to $80 billion and assets that incorporate ESG factors into the investment process to $600 million.
Parnassus, which was founded in 1984 in San Francisco, pioneered responsible investing. Its investment process has focused on generating long-term, risk-adjusted returns while integrating environmental, social, and governance (ESG) factors into company selection from the very start. As an AMG Affiliate, the Parnassus investment team will remain fully independent and does not plan to change its investment process.
Parnassus offers five socially responsible fossil-fuel-free mutual funds in the areas of core equity, midcap, midcap growth, large-cap, and fixed income in the U.S. Their European business is growing as well. The funds follow a precise investment selection and ESG due diligence process to select holdings based on values. The funds carry five and four-star Morningstar ratings.
“Given our longstanding relationship with AMG, and its three-decade history of successful partnerships with independent active investment firms, we are excited about our new partnership. We believe it provides long-term certainty for our clients and enhances the competitive positioning of our business,” said Benjamin E. Allen, chief executive officer of Parnassus, in the announcement. “Since our founding, we have been committed to remaining independent and investing based on both Principles and Performance.”
The company has been actively involved in all aspects of ESG and is pushing for real change across many industries. Its proactive approach includes proxy voting, writing company letters, management engagement, stewardship reporting, annual company assessments, publishing ESG profiles, and participating in industry associations and initiatives.
“As a shareholder, you are an owner of a company. And as the owner, you have a voice in how your companies should operate,” said Iyassu Essayas, director of ESG Research at Parnassus in a recent presentation. “One of the great dividends about proxy voting is that an upcoming proxy vote can actually be an incentive for management teams to engage with shareholders and having a dialog in matters that are important to both parties.”
Parnassus has an established relationship with management teams of companies it invests in. It holds votes on issues that include executive compensation, the election of directors, diversity, philanthropy, employees, and supply chain, business practices, community relations, and environment. The company publicly discloses its proxy voting guidelines as well as how it voted on its website.
This transaction marks the culmination of the transition from Parnassus founder Jerome Dodson to a new generation of leadership of the company. Dodson retired from its active participation in the management of the company and funds in 2020 and will no longer retain any ownership of the company at the closing of this transaction.
“I started Parnassus Investments more than 35 years ago because I believed that one could invest according to their values and still beat the market,” said Dodson. “I’m gratified to see how many investors are now investing the way we have at Parnassus for so many years. I am proud of Parnassus’ seasoned leadership team and very pleased that the company we built will live on to serve generations of clients to come.”
