| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 16.83% | 9.62% |
Parnassus Core Equity Fund returned 16.83% net in Q2 2026, outperforming the S&P 500's 15.20%, driven by holdings in Information Technology and Communication Services sectors and lack of Energy exposure. The fund maintains a balanced portfolio with 40% offensive positions in AI infrastructure winners and 60% defensive positions in resilient compounders. Top contributors included semiconductor equipment and chip makers Applied Materials, AMD, and KLA, benefiting from continued AI infrastructure demand. New positions in DoorDash, GE Vernova, and Hubbell provide exposure to food delivery recovery and electrical infrastructure tied to AI-driven power demand. The fund exited Boston Scientific, Salesforce, and Verisk Analytics to reallocate toward higher-conviction opportunities. Management remains constructively bullish on U.S. equities while acknowledging market concentration at levels not seen since 1999. They view AI as more disruptive than the dot-com bubble and continue positioning for foundational infrastructure ownership. The team stays selective and valuation-sensitive, focused on upgrading portfolio quality through active stock selection while seeking competitively advantaged businesses at attractive valuations.
The fund pursues long-term outperformance by owning a concentrated portfolio of high-quality U.S. large cap businesses available at attractive prices, positioning to own the foundational infrastructure of the future while maintaining quality compounders that can hold up well in down markets and emerge stronger.
Management remains constructively bullish on U.S. equities while acknowledging increased caution compared to January. They view AI as more disruptive than the dot-com bubble, potentially becoming the platform running companies. U.S. exceptionalism remains a core pillar of their investment framework, with American companies having wider moats, deeper R&D investment and bigger addressable markets than international peers. The team continues to be selective, valuation-sensitive and focused on upgrading portfolio quality through active stock selection, seeking increasingly relevant, competitively advantaged businesses at attractive valuations with the goal of creating enduring value.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 16 2026 | 2026 Q2 | AAPL, AMAT, AMD, AMZN, AZO, BSX, CRM, DASH, DE, GEV, GOOGL, HUBB, ICE, KLAC, MSFT, NVDA, O, VRSK, WM | AI, Energy Infrastructure, large cap, Quality, semiconductors, technology, valuation | - | Parnassus Core Equity outperformed in Q2 2026 with a 16.83% return, driven by semiconductor and AI infrastructure holdings. The fund balances 40% offensive AI positions with 60% defensive quality compounders, adding exposure to electrical infrastructure and food delivery while exiting competitive healthcare and software names. Management remains constructively bullish on U.S. equities despite record market concentration, positioning for foundational infrastructure ownership at sensible valuations. |
| Apr 17 2026 | 2026 Q1 | AMAT, BRO, BSX, CRM, DE, DHR, KLAC, LIN, NOW, O, ODFL, SPGI, TMO, VMC, WDAY | AI, Geopolitical, healthcare, industrials, large cap, Quality, semiconductors |
ODFL VMC |
Parnassus underperformed in Q1 on healthcare weakness and energy underweight. The fund is strategically repositioning around AI disruption, keeping semiconductor equipment exposure while exiting software names and adding infrastructure plays. Geopolitical tensions create near-term volatility but strong earnings backdrop supports cautious optimism for 2026 returns driven by fundamentals over multiple expansion. |
| 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 | - | Parnassus Core Equity underperformed in Q4 but maintains bullish 2026 outlook, expecting market broadening to favor active management. The fund balances defensive positioning with offensive AI investments in semiconductors, hyperscalers, and software. Strong conviction in quality companies like Eli Lilly and Applied Materials drives long-term outperformance strategy despite near-term volatility. |
| Oct 15 2025 | 2025 Q3 | AAPL, AMD, AVGO, AZO, BRO, BSX, CRM, DE, FI, GOOGL, GWW, ICE, INTU, KLAC, LLY, NVDA, ORCL, SYK, TMO, WDAY | AI, Defensive, financials, industrials, large cap, Quality, semiconductors, technology |
BSX US GWW US |
Parnassus Core Equity underperformed in Q3 as defensive positioning hurt amid risk-on sentiment, though AI infrastructure and semiconductor holdings provided support. The Fund balances defensive quality names with offensive AI exposure, remaining constructively bullish on stable growth and corporate profits while monitoring inflation, Fed independence, and AI monetization risks through concentrated high-quality positioning. |
| Jun 30 2025 | 2025 Q2 | AAPL, AMZN, AVGO, BRO, DE, DHR, FERG, FIS, GOOGL, ICE, INTU, LIN, MA, MSFT, NVDA, ORCL, SPGI, TMO, VRTX, WM | AI, defensives, financials, large cap, Quality, technology | - | Parnassus Core Equity underperformed in Q2 but maintains bullish outlook on U.S. large caps driven by AI transformation and American exceptionalism. Portfolio balances defensive quality holdings with offensive AI positioning in semiconductors and hyperscalers. Despite trade policy uncertainty, managers see continued opportunity in high-quality businesses with durable competitive advantages. |
| Apr 14 2025 | 2025 Q1 | AMD, AMZN, AZO, BCOM, BRO, CI, CRM, DE, DHI, GOOGL, ICE, MA, MAR, MSFT, NOW, NVDA, O, SNPS, VZ, WM | AI, Defensive, financials, industrials, large cap, Quality, semiconductors | - | Parnassus Core Equity outperformed during Q1's market decline through defensive positioning and quality stock selection. The fund added AI exposure via AMD and ServiceNow while maintaining balanced offense-defense positioning. Despite policy uncertainty creating near-term volatility, managers remain focused on high-quality businesses with long-term growth potential, particularly AI beneficiaries and resilient defensive companies. |
| Dec 31 2024 | 2024 Q4 | AMZN, AVGO, BAC, BALL, CI, CME, CRM, DE, DHI, FERG, FI, INTC, KLAC, LIN, LLY, O, ORCL, SYY, VRTX, WDAY | Cloud, Esg, healthcare, large cap, materials, Pharmaceuticals, technology, value |
FERG LLY WDAY KLAC VRTX |
Parnassus Core Equity underperformed in Q4 and 2024 despite strong AI-related gains, hurt by Materials overweight and Financials selection. The fund added healthcare and technology positions while maintaining balanced positioning. Management sees 2025 driven by AI adoption, fiscal policy debates, and international recoveries, with continued opportunities in Materials and Financials sectors. |
| Oct 28 2024 | 2024 Q3 | ADBE, AMAT, AMZN, BALL, CHTR, CRM, DE, DHI, GOOGL, ICE, INTC, MA, MSFT, MU, NVDA, O, SHW, SNPS, SYK, WM | AI, financials, large cap, materials, Quality, semiconductors, technology | - | Parnassus Core Equity delivered 5.50% in Q3, focusing on high-quality U.S. large caps with AI infrastructure exposure. The fund upgraded portfolio quality by exiting Intel and Micron for Amazon and Stryker. Lower rates benefited REITs and homebuilders while semiconductor concerns pressured tech holdings. Management remains optimistic on AI transition opportunities despite monitoring for overvaluation. |
| Jul 15 2024 | 2024 Q2 | AAPL, ADBE, AMAT, AVGO, BAC, BALL, COST, CRM, DE, FI, GOOGL, INTC, LIN, MA, MSFT, MU, NTR, NVDA, O, ORCL, RHHBY, VRSK | AI, Esg, growth, large cap, Quality, semiconductors, technology, value | - | Parnassus Core Equity underperformed in Q2 due to tech stock selection despite AI tailwinds benefiting top holdings like Alphabet and Oracle. The fund maintains balanced positioning in high-quality large caps, trimming financials and health care while adding to real estate. Managers remain constructive on the investment landscape given moderating inflation and strong earnings growth. |
| Apr 27 2024 | 2024 Q1 | AAPL, AMAT, AVGO, AZO, CHTR, CP, DE, FI, GILD, GOOGL, INTC, MSFT, MU, NVDA, O, ORCL, RHHBY, SPGI, TXN, VZ | large cap, REITs, semiconductors, technology, Telecom, value | - | Parnassus Core Equity returned 9.99% in Q1, slightly trailing the S&P 500. The fund maintains balanced positioning amid soft landing optimism, adding defensive exposure through Verizon and Realty Income while capturing AI and semiconductor recovery themes via Micron and Broadcom. Strong Information Technology stock selection offset Communication Services weakness, with managers remaining disciplined on valuation while positioning for long-term secular growth. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure build-out drove market performance and portfolio positioning. The fund maintains exposure through semiconductor equipment makers, chip designers, and hyperscalers. Management views AI as more disruptive than the dot-com bubble, potentially becoming the platform running companies rather than just changing communication. |
Semiconductors Data Centers Cloud Infrastructure Hyperscalers |
SemiconductorsSemiconductor and semiconductor equipment companies were top contributors, benefiting from AI-driven data center buildouts. The fund holds Applied Materials, AMD, KLA, and NVIDIA as core positions. Management believes these companies are well positioned to continue benefiting from increased AI adoption. |
AI Data Centers Semi Equipment Chip Designers Manufacturing | |
Energy TransitionThe fund initiated positions in GE Vernova and Hubbell to gain exposure to electrical infrastructure tied to growing AI-driven power demand. Management sees growing investment in U.S. electrical grid modernization and rising power demand from electrification and AI infrastructure as key drivers. |
Grid Upgrade Power Equipment Electrical Equipment Utilities Infrastructure | |
Market ConcentrationMarket breadth in 2026 has been the narrowest since 1999, with returns and earnings growth concentrated in a narrow group of companies. This concentration makes participating more challenging for active managers seeking quality companies across a broader opportunity set and calls for caution. |
Risk Appetite Mega Cap Earnings Volatility Diversification | |
ValuationThe fund remains valuation-sensitive and focused on owning companies with real earnings power at sensible prices. Management continues to be selective and disciplined about upgrading portfolio quality through active stock selection, seeking increasingly relevant businesses at attractive valuations. |
Quality Value Earnings Risk Management Selectivity | |
| 2026 Q1 |
AIThe fund is balancing AI opportunity with heightened risks, seeking equilibrium between holdings positioned to benefit from AI adoption and those with growth prospects not dependent on AI. They maintain meaningful exposure to companies benefiting from AI-driven capital spending, particularly in semiconductors and semiconductor equipment, while also looking beyond the semiconductor ecosystem to companies less likely to be disrupted. |
Artificial Intelligence Semiconductors Technology Disruption Infrastructure |
SemiconductorsThe fund continues to seek meaningful exposure to companies benefiting from AI-driven capital spending, particularly in semiconductors and semiconductor equipment. Applied Materials and KLA were top contributors, benefiting from sustained demand tied to AI infrastructure build-out and strong demand for leading-edge chip manufacturing equipment. |
Chip Manufacturing Equipment AI Infrastructure Technology | |
Infrastructure SpendingThe fund added Old Dominion Freight Line and Vulcan Materials to benefit from infrastructure spending trends and reshoring of industry. Vulcan is positioned to benefit from ongoing public infrastructure investment and improving private construction activity. |
Construction Materials Transportation Public Investment | |
OnshoringThe fund expects Old Dominion Freight Line and Vulcan Materials to benefit from structural tailwinds such as nearshoring and reshoring of industry, supporting volume growth and margin expansion over time. |
Supply Chain Manufacturing Logistics Structural Trends | |
| 2025 Q4 |
AIThe fund views AI as a generational demand driver creating durable need for faster, more powerful computing. They are leaning into AI beneficiaries including hyperscalers, semiconductors and software companies as an 'anti-bubble' strategy. They believe AI technology is a lasting innovation that will transform the global economy and they are likely in the early stages of a decade-long AI investment cycle. |
Artificial Intelligence Hyperscalers Semiconductors Data Centers Computing |
SemiconductorsApplied Materials and KLA were top contributors due to AI-driven semiconductor demand and exposure to leading-edge AI chip manufacturing. The fund sees sustained AI-driven semiconductor demand with improving customer outlooks supporting the sector. They view this as part of their offensive positioning in areas where convictions are highest. |
Chip Manufacturing AI Chips Semiconductor Equipment Memory Processing | |
FinancialsFinancials sector holdings detracted from performance both quarterly and annually. The fund exited Fiserv due to management turnover and earnings algorithm reset. However, they favor nonbank financials like information exchanges that are using AI to increase the value of their proprietary data. |
Banking Financial Services Information Exchanges Payment Processing | |
BiotechnologyEli Lilly was a top contributor as concerns around GLP-1 weight-loss drugs eased following stronger-than-expected demand data. The fund continues to lean into technology adopters like Eli Lilly that continue to innovate to improve patient outcomes. They also favor life science tools companies that provide valuable equipment for clinical research. |
GLP-1 Pharmaceuticals Drug Development Life Sciences Medical Innovation | |
CloudAlphabet transitioned from being perceived as an AI risk to an AI winner, with growth in YouTube, search and cloud businesses accelerating. The fund sees cloud as part of their AI beneficiary strategy and views these companies as using massive R&D spend to lead their markets. |
Cloud Computing Search Digital Advertising Platform Services | |
| 2025 Q3 |
AIThe Fund maintains offensive positions in AI beneficiaries including hyperscalers, semiconductors and software. The AI buildout continues to exceed expectations, led by U.S. companies that have invested and scaled the technology to drive massive infrastructure transformation. However, rising AI infrastructure investments require greater monetization to avoid overheating. |
Infrastructure Hyperscalers Monetization Investment Buildout |
SemiconductorsThe portfolio includes strategic exposure to semiconductor companies as part of AI infrastructure positioning. KLA benefited as investors rewarded critical players in the AI semiconductor supply chain amid rising expectations for AI-driven chip demand. The Fund trimmed Advanced Micro Devices and Broadcom where valuations have trended higher. |
Supply Chain Equipment Valuations Demand Manufacturing | |
Data CentersRising power demand fueled by the expansion of AI data centers could push electricity prices higher and add inflationary pressure to businesses and consumers alike. This represents both an opportunity and risk as AI infrastructure continues to expand rapidly. |
Power Demand Infrastructure Electricity Expansion AI | |
| 2025 Q2 |
AIAI is viewed as a durable long-term trend that will transform the economy, with U.S. companies at the forefront. The fund has taken advantage of market volatility to lean into secular trends through investing in AI beneficiaries including hyperscalers, semiconductors and certain areas of software. Second-quarter performance of the Information Technology sector confirmed that investments in AI are propelling growth. |
Hyperscalers Semiconductors Software Data Centers Cloud |
QualityThe fund maintains a bias toward higher-quality businesses that will likely remain resilient regardless of economic outcomes. This includes non-bank Financials such as data and exchange companies, high-quality business services companies, and innovative Industrials companies. The strategy focuses on high-quality companies that offer potential for market upside and resilience in market downturns. |
Resilience Business Services Moats Defensives Stability | |
| 2025 Q1 |
AIThe portfolio maintains positioning in AI beneficiaries including hyperscalers, semiconductor companies, and software companies that are building the computing foundation of the future. The fund added AMD and ServiceNow during the quarter to strengthen its AI theme exposure. Despite near-term volatility, the managers remain optimistic about long-term opportunities in AI infrastructure providers. |
Semiconductors Cloud Data Centers Enterprise Software GPUs |
SemiconductorsThe fund maintains overweight positioning in semiconductor stocks despite sector volatility during the quarter. Added Advanced Micro Devices as a strong player in multiple end markets including AI accelerators, taking advantage of share price decline. Broadcom declined as investors grew pessimistic about the current chip cycle, but the fund continues to see long-term potential in the semiconductor space. |
AI GPUs Memory Semi Equipment Chip Designers | |
ResilienceThe portfolio emphasizes high-quality resilient defensive stocks that can weather economic uncertainty and volatility. Companies like Waste Management benefited from their defensive characteristics as their core business is relatively unaffected by economic slowdowns. The fund seeks businesses with stable earnings and defensive positioning amid heightened market volatility. |
Quality Waste Management Utilities Consumer Staples Healthcare | |
| 2024 Q4 |
AIAI remained a dominant theme throughout 2024, with companies like Oracle gaining market share in cloud-based training of generative AI models and Broadcom benefiting from AI chip sales. The fund expects the path and continuation of frontier AI model scaling to be a notable driver of investment returns in 2025, along with greater AI usage and workflow integration across consumer and enterprise businesses. |
Cloud Semiconductors Enterprise Software Data Centers Automation |
MaterialsThe fund maintains its largest overweight in Materials despite the sector being the worst performer in Q4. Ball Corp faced mixed demand for aluminum packaging with end-market weakness in some regions, though the fund anticipates a recovery in demand. The fund continues to see attractive opportunities across the Materials sector. |
Aluminum Packaging Industrial Chemicals Commodity Chemicals Recycling | |
GLP1The fund initiated a position in Eli Lilly during Q4, citing the company's exceptional GLP-1 franchise and strong track record of innovation. A rare revenue miss and political concerns around the health secretary nomination created an attractive entry point for exposure to the drugmaker's product suite and pipeline. |
Diabetes Pharmaceuticals Biotechnology Obesity Innovation | |
CloudCloud infrastructure and enterprise applications were key themes, with Oracle's Cloud Infrastructure helping reaccelerate growth and Workday being added as a category leader for enterprise cloud applications. The fund sees continued growth potential in cloud-based solutions for finance and human resources. |
SaaS Enterprise Software Data Centers IT Services Workflow Automation | |
| 2024 Q3 |
AIThe fund maintains exposure to companies benefiting from the shift away from legacy computing infrastructure to AI infrastructure, including accelerated and cloud computing, semiconductors, software and other companies benefiting from these capabilities. They have a portfolio theme around companies with hyperscale exposure and are monitoring for overinvestment and excessive valuations. |
Hyperscale Cloud Semiconductors Infrastructure |
SemiconductorsThe fund made significant adjustments in semiconductor holdings, selling lower-quality businesses Intel and Micron Technology due to market compression, uncertainty around memory cyclicality, and declining market share. They view the semiconductor industry with caution regarding durability of growth and capital expenditure cuts in memory spending. |
Memory Cyclicality Equipment Foundries | |
QualityThe fund emphasizes increasing portfolio quality by making adjustments across sectors. They sold lower-quality semiconductor businesses and cable providers while adding higher-quality names like Amazon and Stryker, focusing on competitively advantaged businesses with strong fundamentals. |
Fundamentals Competitive Advantage Defensive Resilience | |
| 2024 Q2 |
AIAI-related narratives drove the largest positive and negative contributions to performance. Companies like Alphabet, Applied Materials, and Oracle rose on confidence about AI infrastructure build-out and adoption. The fund continues to focus on companies well positioned to capitalize on emerging AI opportunities. |
Artificial Intelligence Infrastructure Cloud Technology Growth |
SemiconductorsApplied Materials benefited from accelerated industry spend due to AI and share gains as the world's largest supplier of wafer fabrication technologies. Intel showed progress on technology roadmaps albeit at a slower-than-expected pace. |
Wafer Fabrication Technology Manufacturing Equipment | |
| 2024 Q1 |
AIThe artificial intelligence related momentum and optimism that characterized much of 2023's market activity continued in the quarter, especially within the Semiconductors industry. Broadcom benefits from the adoption and proliferation of AI and has established itself as one of the leading providers of custom silicon products. Rising investment in AI fuels demand for memory providers like Micron. |
Semiconductors Custom Silicon Memory Adoption |
Semiconductor CycleApplied Materials gained as a resurgent environment for semiconductor chip production improved sentiment around the stock. Micron Technology is a memory provider entering a cyclical recovery supported by secular trends after a cyclical downturn. The DRAM and NAND memory markets are recovering. |
Memory DRAM NAND Equipment Recovery | |
DividendsVerizon offers an attractive dividend yield and decent margin growth potential. Realty Income demonstrated resiliency during the pandemic and offers a desirable dividend yield, providing defensiveness in an environment with potentially lower rates. |
Yield Income Defensiveness REIT |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 17, 2026 | Fund Letters | Parnassus Core Equity Fund | ODFL | Old Dominion Freight Line, Inc. | Trucking | Ground Transportation | Bull | NASDAQ | capital allocation, Freight, Industrial Consolidation, Logistics, LTL Transportation, Nearshoring, network effects | Login |
| Apr 17, 2026 | Fund Letters | Parnassus Core Equity Fund | VMC | Vulcan Materials Co. | Building Materials | Construction Materials | Bull | New York Stock Exchange | aggregates, barriers to entry, construction materials, Construction Recovery, Geographic Moats, infrastructure, Quarries | Login |
| 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 |
| Dec 31, 2024 | Fund Letters | Parnassus Core Equity Fund | FERG | Ferguson Enterprises Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | construction, Distributor, Housing, Industrials, infrastructure, market consolidation, Plumbing, Scale Advantages | Login |
| Dec 31, 2024 | Fund Letters | Parnassus Core Equity Fund | LLY | Eli Lilly & Co. | Health Care | Pharmaceuticals | Bull | NYSE | Biotech, Diabetes, GLP-1, healthcare, innovation, Obesity, pharmaceuticals, pipeline | Login |
| Dec 31, 2024 | Fund Letters | Parnassus Core Equity Fund | WDAY | Workday Inc. | Information Technology | Application Software | Bull | NASDAQ | Cloud Applications, Enterprise software, Finance, Human Resources, Partnerships, Product Stickiness, SaaS, technology | Login |
| Dec 31, 2024 | Fund Letters | Parnassus Core Equity Fund | KLAC | KLA Corp. | Information Technology | Semiconductor Equipment | Bull | NASDAQ | Advanced Semiconductors, China risk, manufacturing, Metrology, process control, semiconductor equipment, switching costs, technology | Login |
| Dec 31, 2024 | Fund Letters | Parnassus Core Equity Fund | VRTX | Vertex Pharmaceuticals Inc. | Health Care | Biotechnology | Bull | NASDAQ | Acquisitions, biotechnology, Clinical Outcomes, Cystic fibrosis, Diabetes, innovation, pipeline, rare diseases | Login |
| TICKER | COMMENTARY |
|---|---|
| AMAT | Applied Materials, a supplier of semiconductor manufacturing equipment, was the top contributor. Demand for AI infrastructure continued to climb, which buoyed the shares. We believe the company is well positioned to continue benefiting from increased AI adoption and data center buildouts. |
| AMD | Advanced Micro Devices (AMD), a leading semiconductor manufacturer, was among the top three contributors. Demand for AI infrastructure continued to climb, which buoyed the shares. We believe the company is well positioned to continue benefiting from increased AI adoption and data center buildouts. |
| KLAC | KLA, which makes tools to inspect and control chip production quality, was among the top three contributors. Demand for AI infrastructure continued to climb, which buoyed the shares. We believe the company is well positioned to continue benefiting from increased AI adoption and data center buildouts. |
| DASH | DoorDash, the food delivery platform, is a new position initiated during the quarter. We bought the stock at a recent low, then it rebounded as geopolitical worries eased and gasoline prices fell, supporting driver economics, consumer willingness to spend on delivery and sentiment toward the business. DoorDash is the clear leader in U.S. food delivery and is expanding beyond restaurants into grocery, convenience, retail and international markets, increasing its opportunity set over time. While investors have recently focused on near-term spending and profitability pressures, we believe these investments can strengthen the company's competitive position and support future earnings growth. In our view, DoorDash's market leadership, growing network scale and multiple avenues for monetization provide an attractive risk/reward opportunity for long-term investors. |
| GEV | GE Vernova, another new position, had previously sold off significantly and reached a valuation that we found compelling. Shares of the energy equipment manufacturer gained on increasing confidence about the durability of AI supply chain power needs. GE Vernova provides exposure to the growing demand for power infrastructure driven by AI adoption, electrification and grid modernization. As a leading provider of gas turbines and grid equipment, GE Vernova operates in supply-constrained markets with strong long-term demand and attractive growth prospects. We believe its improving earnings profile, durable competitive position and exposure to the build-out of AI-related energy infrastructure offer an attractive risk-reward opportunity, particularly following a pullback in the stock price. |
| ICE | Intercontinental Exchange shares came under pressure after U.S. regulators eased restrictions on perpetual futures—derivative contracts that let investors speculate on an asset's price movements without owning the asset, with no expiration date—which could present competitive challenges to established exchanges. |
| WM | Waste Management stock declined after the environmental solutions provider reported mixed financial results for the first quarter, with earnings topping consensus estimates while revenues fell short. The defensive stock also did not fully participate in the broader market rally. We remain confident in Waste Management's long-term growth potential, given its strong competitive moat and dominant market position in landfill ownership. |
| BSX | Boston Scientific detracted after growth slowed in two of its key businesses—its electrophysiology franchise and Watchman heart implant for reducing stroke risk—amid growing competition and mixed clinical trial results. We exited the stock during the quarter. We exited Boston Scientific as the competitive environment evolved more quickly than anticipated. Growth in key franchises—particularly Farapulse and Watchman—slowed due to earlier-than-expected competitive pressures and mixed clinical trial outcomes. While market share may stabilize over time, reduced visibility into a near-term reacceleration led us to reallocate capital toward higher-conviction opportunities with more compelling risk/reward profiles. |
| AZO | AutoZone benefited in the previous quarter from tariffs and higher car prices, but as those effects faded, the stock did not keep pace with the broader market in the second quarter. |
| O | Realty Income posted a positive return for the quarter but lagged the broader market amid uncertainty around Fed interest rate policy and investor rotation out of defensive stocks such as REITS and into higher-growth areas. |
| HUBB | We also purchased GE Vernova and Hubbell, which offer exposure to electrical infrastructure tied to growing AI-driven power demand. Hubbell, as a leading provider of utility equipment, serves a critical role in helping utilities modernize and expand their networks, supported by a strong market position, a broad product portfolio and a history of successful acquisitions. We believe the company is well positioned to benefit from growing investment in the U.S. electrical grid and the rising demand for power driven by electrification and AI-related infrastructure needs. |
| CRM | We sold Salesforce as conviction in horizontal application software declined amid increased competition, weaker pricing dynamics and less attractive valuations. We redeployed capital into opportunities with more direct exposure to structural AI tailwinds. |
| VRSK | While we continue to view Verisk as a high-quality business, its valuation had become less compelling given uncertainty in the insurance industry and the potential impact of AI on the business. We redeployed capital into higher-conviction opportunities with greater long-term return potential. |
| GOOGL | Alphabet Inc., Class A is the fund's largest holding at 5.9% of total net assets. |
| NVDA | NVIDIA Corp. is the fund's third largest holding at 5.8% of total net assets. |
| MSFT | Microsoft Corp. is the fund's fourth largest holding at 5.3% of total net assets. |
| AMZN | Amazon.com Inc. is the fund's fifth largest holding at 4.7% of total net assets. |
| AAPL | Apple Inc. is among the fund's top ten holdings at 4.3% of total net assets. |
| DE | Deere & Co. is among the fund's top ten holdings at 3.1% of total net assets. |
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