| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.3% | 1.6% | 11.6% |
| 2025 |
|---|
| 11.6% |
Parnassus Core Equity Fund returned 1.59% in Q4 2025, underperforming the S&P 500's 2.66%, with full-year returns of 11.64% versus the benchmark's 17.88%. The fund maintains a concentrated portfolio of high-quality U.S. large cap companies, balancing defensive positioning for market volatility with offensive investments in AI beneficiaries including hyperscalers, semiconductors, and software companies. Key contributors included Eli Lilly, which rebounded on strong GLP-1 drug demand, and semiconductor companies like Applied Materials and KLA benefiting from AI-driven capital spending. Detractors included AutoZone and financial services companies facing execution challenges. The managers remain bullish heading into 2026, expecting market broadening to favor their active stock selection approach. They view AI as a generational demand driver in the early stages of a decade-long investment cycle, while maintaining conviction in life science tools companies and technology adopters positioned for continued innovation and market leadership.
The fund pursues long-term outperformance by owning a concentrated portfolio of high-quality U.S. large cap businesses available at attractive prices, focusing on companies that innovate, invest, adapt and deliver high returns on capital while positioning defensively for volatility and offensively in AI beneficiaries.
We remain relatively bullish heading into 2026 and expect the market to broaden, which should favor our active approach. After three incredibly strong years, we expect the S&P 500 to be capable of delivering another year of double-digit returns. We temper our optimism with the reality that stocks don't rise forever at the fast rate we've seen in recent years.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | AAPL, AMAT, AMD, AZO, BALL, BRO, CRM, DHR, EFX, FISV, GOOGL, HD, KLAC, LIN, LLY, MSFT, ORCL, TMO, VRTX, WDAY | AI, growth, healthcare, large cap, Quality, semiconductors, technology, value | - | The fund views AI as a generational demand driver creating durable need for faster, more powerful and energy-efficient computing. They are likely in the early… |
| Oct 15 2025 | 2025 Q3 | AAPL, AZO, BRO, BSX, DE, FI, GOOG, GWW, ICE, INTU, KLA GR, ORCL, TMO | Artificial Intelligence, quality growth, semiconductors, software, U.S. Equities |
BSX US GWW US |
The fund remains bullish on U.S. equities, supported by resilient earnings and transformative AI infrastructure investment. It balances defensive holdings with strategic exposure to semiconductors… |
| Jun 30 2025 | 2025 Q2 | - | Artificial Intelligence, fundamentals, Large Caps, Quality, Resilience | - | The letter emphasizes high-quality U.S. large-cap companies with durable moats and attractive valuations amid tariff uncertainty and market concentration. Management highlights artificial intelligence as a… |
| Apr 14 2025 | 2025 Q1 | AMD, AMZN, AVGO, AZO, BRO, CI, CRM, DE, DHI, ICE, MAR, SNPS, VZ, WM | - | - | - |
| Dec 31 2024 | 2024 Q4 | AMZN, AVGO, BAC, BALL, CI, CME, CRM, DE, DHI, FERG, FI, INTL, KLAC, LIN, LLY, MDLZ, O, ORCL, SYY, VRTX, WDAY | - | - | - |
| Oct 28 2024 | 2024 Q3 | ADBE, AMAT, AMZN, CHTR, DHI, GOOG, ICE, INTC, MU, O, SHW, SNPS, SYK, WM | - | - | - |
| Jul 15 2024 | 2024 Q2 | AAPL, AMAT, BALL, COST, CRM, DE, GOOGL, INTC, ORCL, VRSK | - | - | - |
| Apr 27 2024 | 2024 Q1 | AAPL, AMAT, AZO, CHTR, DE, FI, INTC, ORCL, RHO GR, SPGI | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
CloudCloud computing remains a core portfolio theme with strong positioning in hyperscale providers and infrastructure companies. Microsoft Azure showed 39% growth while Google Cloud exceeded 30% growth, both supported by AI workload adoption. The fund sees continued multi-year demand for cloud infrastructure and services as enterprises accelerate digital transformation. |
Azure Infrastructure Hyperscale Enterprise Growth | |
Life Science ToolsThe Fund maintains 14.2% allocation to life sciences tools & services. End markets are improving with strong biotechnology funding, stable biopharmaceutical R&D investment, and reduced risk of industry disruption following drug pricing agreements with the Trump Administration. |
Research Tools Bioprocessing Equipment | |
PharmaceuticalsEli Lilly represents a high-quality growth franchise in global healthcare, with leadership in diabetes, obesity, and neuroscience providing durable competitive advantages. The company's GLP-1 treatments continue to see demand outpace supply with additional indications on the horizon. |
Pharmaceuticals GLP1 Diabetes Obesity Healthcare | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
Quality Growth |
||
| 2025 Q2 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 15, 2025 | Fund Letters | Todd Ahlsten | BSX US | Boston Scientific Corp. | Health Care | Medical Devices | Bull | NYSE | growth, healthcare, innovation, leadership, Margins, Medical devices | Login |
| Oct 15, 2025 | Fund Letters | Todd Ahlsten | GWW US | W.W. Grainger Inc. | Industrials | Distribution & Logistics | Bull | NYSE | Distribution, e-commerce, efficiency, Industrials, Logistics, MRO, Nearshoring | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. |
| AMAT | AMAT was a top contributor in 4Q25 as semiconductor equipment stocks rallied on improving wafer-fab spending visibility. Management noted during its quarterly call that orders tied to AI-related capacity—particularly advanced logic and high-bandwidth memory—were tracking ahead of plan, leading to mid-teens growth in semiconductor systems revenue. Strength in services and spares also continued, with installed base revenues growing at a high single-digit rate. |
| AMD | AMD was mentioned as an example of businesses that already make money, have shown they can do so through cycles and are priced so that we do not need everything to go right. |
| AZO | We initiated two new positions during the year—Greggs and AJ Bell, whilst reducing our exposure to NEXT and Compass Group; and selling out of AutoZone entirely during September. |
| BALL | Ball shares were pressured by a combination of industry headwinds and operational challenges. We sold the holding during the quarter to focus on areas where our conviction is higher. |
| BRO | In 2026, we plan to publish deep dives on Brown & Brown |
| CRM | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| DHR | After lagging through the first three quarters of 2025, Danaher's stock rebounded during Q4 as bioprocessing, life science, and diagnostics demand continued to recover from a cyclical trough. On the 3Q25 call, management established conservative 2026 growth expectations. Revenue is expected to continue to lag long-term trends at 3-6% but improve throughout the year. |
| EFX | We divested our position in Equifax during the quarter following a strategic shift by FICO, a leading provider of credit scores to the mortgage industry. FICO announced plans to sell its credit scores directly to mortgage underwriters, bypassing the credit bureaus and thereby pressuring the economics that EFX has historically captured in the credit-scoring value chain. |
| FISV | Fiserv is a financial technology company that provides payments and other solutions to merchants and financial institutions. The company's scale, diversification, and ability to compound earnings at a double-digit rate make current valuation attractive. There was a sharp reset in Q3, with the FY25 outlook cut materially after a large miss versus expectations concentrated in the Financial Solutions segment, where both topline growth and profitability disappointed. While 2026 guidance has not been formally introduced, the new CEO framed FY26 as a transition year that resets the long-term growth algorithm to a lower baseline. Once earnings stabilize, we believe Fiserv offers a combination of strong topline growth, margin expansion, and cash generation. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| HD | Conversely, our biggest detractors this quarter were DR Horton (DHI), Lennar Corp (LEN), Home Depot (HD). |
| KLAC | KLA Corporation (KLAC) is a leading global semiconductor production equipment manufacturer, specializing in process control tools that detect and reduce defects in advanced chip manufacturing. The share price advance in 2025 reflects growing investor recognition of KLA's pricing power, structural growth, and mission-critical role in advanced semiconductor fabrication. We reduced the position during the year in order to capture strong gains, but the company remains a core portfolio holding. |
| LIN | While the company remains a high-quality global leader in industrial gases, shares of Linde plc declined nearly 10% in Q4 due to a persistent industrial gas volume recession, softer guidance and global macroeconomic concerns. From a macro standpoint, the company continues to struggle with negative base volumes in its core industrial segments. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| TMO | Thermo Fisher Scientific was a strong contributor with 8.69% ending weight and 1.47% contribution. |
| VRTX | Vertex Pharmaceuticals benefited from growing optimism around its kidney disease pipeline and continued to demonstrate the value of idiosyncratic, innovation-driven growth. |
| WDAY | Finally, we have exited our relatively small position in Workday. The company's growth has decelerated the past few quarters and the Financials segment of the business (~25% of sales) is growing slower than we believe it should be. This is a company we may revisit at a later date but, for now, feel that we have better opportunities in other areas of the portfolio. |
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