When we recommended large-blend Parnassus Core Equity Fund (PRBLX) a year ago, what stood out most was its impressive 10-year record, which far outshone that of most of its peers, asserts growth and income expert Stephen Leeb, editor of The Compete Investor.

The major reason was the fund’s stellar performance, in relative terms, in 2008. While it lost around 22 percent during that horrid year, most averages and funds plunged 35 percent or more.

In the past 12 months Parnassus has racked up decent but not spectacular returns. It’s up almost 17 percent, but that’s more than 4 percentage points below the average for its peers, and about 5 percentage points below the S&P 500. This has brought both its three- and five-year records to below the S&P 500’s results.

But if the market suddenly entered a major decline, we think Parnassus would again show its mettle and outperform. And in the current environment, in which there’s a chance that volatility could suddenly show its face, spooking investors (see p.1), such downside protection counts for a lot.

Get Top Pros' Top Picks, MoneyShow’s free investing newsletter »

Parnassus Core Equity’s downside protection credentials come from the kinds of stocks it focuses on, which we’d describe as growth stocks with notable value underpinnings.

The fund’s top holding is pharmaceutical company Gilead Sciences (GILD). While its two major franchises, treatment for AIDS and hepatitis C, have passed their peak, they generate a lot of cash, resulting in a free cash flow yield of close to 10 percent.

This mitigates downside risk and gives Gilead, which has demonstrated a knack for establishing itself in strong growth areas, an edge in making acquisitions that could sharply boost growth.

Three of its top 10 positions, which together account for nearly 13 percent of the fund’s assets, are also holdings in our Growth Portfolio: Danaher (DHR), Intel (INTC), and Wells Fargo (WFC).

We’re happy to own Parnassus Core Equity with its leading 10-year track record and its solid balancing of downside protection with upside reward that should give it an edge if the market turns treacherous.

Subscribe to Stephen Leeb's The Complete Investor here…