Author Topic: Invest in happy companies - Do the numbers add up?  (Read 1852 times)

cranilation

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Invest in happy companies - Do the numbers add up?
« on: January 06, 2017, 11:22:57 AM »
Employee engagement is pretty important.  Companies where the employees actually like their work and like working there have better metrics, according to somewhat suspicious surveys by Gallup

Employee Engagement correlates with being on the list of 100 best companies to work for - so someone set up an index fund for just those companies - the Parnassus Fund

Here's an article from 2013 about the fund

Now, I know very little about investing.  I've got my retirement automatically going into Vangard Target Retire Trust Plus 2050.  I'm happy to ride the index funds because that sounds smart.  But the Parnassus fund has a convincing story. 

Do any of you invest in the Parnassus fund? Does anyone have any advice about this?


Phenix

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Re: Invest in happy companies - Do the numbers add up?
« Reply #1 on: January 06, 2017, 12:42:12 PM »
My advice would be to stick with Vanguard.  The lowest expense ratio Parnassus has to offer is .5% on their income fund.  I would much rather put my money in a Total Stock Market Index for a tenth of the expense.

cranilation

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Re: Invest in happy companies - Do the numbers add up?
« Reply #2 on: January 06, 2017, 12:52:09 PM »
How much better would parnassus have to outperform vangard for it to overcome the higher fees?

Phenix

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Re: Invest in happy companies - Do the numbers add up?
« Reply #3 on: January 06, 2017, 12:58:32 PM »
How much better would parnassus have to outperform vangard for it to overcome the higher fees?

Well I don't expect the income fund with the .5% expense ratio to ever outperform the total stock market over the long run.  But some of the other funds have expense ratios near 1%.  They would essentially have to outperform the Total Stock Market Index by a whole percentage point on a regular basis to make up the difference in expenses.

boarder42

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Re: Invest in happy companies - Do the numbers add up?
« Reply #4 on: January 06, 2017, 01:22:01 PM »
i'm heavily invested in a top 100 company to work for. thats all employee owned.  the market will never beat us(its not ever in the ballpark). its my golden handcuff b/c i will have to sell it all when i FIRE.

boarder42

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Re: Invest in happy companies - Do the numbers add up?
« Reply #5 on: January 06, 2017, 01:31:02 PM »
Since inception of VTSAX its up 100% since 2001 + dividends on top

PARNX - 17.87%
PRBLX - 18.37%


i'm not gonna keep looking

Huskie87

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Re: Invest in happy companies - Do the numbers add up?
« Reply #6 on: January 06, 2017, 02:35:15 PM »
i'm heavily invested in a top 100 company to work for. thats all employee owned.  the market will never beat us(its not ever in the ballpark)

This is logical, since the market is not nearly as risky as an investment in a single company.  A successful individual company should beat the market consistently.  As long as your crystal ball allows you to bail out before fortunes turn you'll be fine. 

boarder42

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Re: Invest in happy companies - Do the numbers add up?
« Reply #7 on: January 06, 2017, 04:49:31 PM »
i'm heavily invested in a top 100 company to work for. thats all employee owned.  the market will never beat us(its not ever in the ballpark)

This is logical, since the market is not nearly as risky as an investment in a single company.  A successful individual company should beat the market consistently.  As long as your crystal ball allows you to bail out before fortunes turn you'll be fine.

We will always beat it but I don't buy anything. It's all given to me. There is a reason we aren't public.

Spork

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Re: Invest in happy companies - Do the numbers add up?
« Reply #8 on: January 06, 2017, 05:21:04 PM »
A small parable from the life of Spork...

Many, many years ago, I thought I was pretty smart and savvy.  I was working in IT and exposed to new/creative things by vendors on a day-to-day basis.  I saw and worked with quite a few things that were just damn good products.  This.  This is what I should be investing in.  And so, since I was "smarter" than Ms Spork (let's call her Keira Knifely, shall we?)... that's where we put our money.

And guess what?  It turns out that in a whole lot of cases, what is "good" in my such-an-expert-eyes, isn't necessarily good business.   We didn't quite lose our shirts, but Keira politely said, "Ahem.  Do you mind if I invest based on business principles?" 

"Oh sure, if you're so smart, go right ahead, missy!"

And... from that point forward most investment was handled by Kiera.  The vast majority was put into non-thinking index funds.  But, to keep things exciting, a small percentage was put into various single stocks.  Almost 20 years later, the Vanguard funds have returned a very livable and safe 8.5%.  The "fun" funds have returned 15.5%.

The moral(s) here:
* Maybe the Parnassus Funds are awesome.  But evaluate them on their bottom line.  Do not focus on other factors.  You are not driving the market by investing in what you agree with unless you're buying at the IPO and/or attending and speaking at the annual meetings.
* Yes, you can out-perform a slow-and-steady set of Vanguard index funds... but there is risk involved.  And I'm pretty sure some amount of luck.
* Keira Knifely is awesome and should not be doubted.