| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.0% | -0.8% | 9.2% |
| 2025 |
|---|
| 9.2% |
Parnassus Mid Cap Growth Fund returned -0.77% in Q4 2025, outperforming the Russell Midcap Growth Index's -3.70% return, and delivered 9.19% for the full year versus the benchmark's 8.66%. The portfolio's Information Technology holdings drove outperformance through exposure to the AI megatrend, primarily via semiconductor companies like Teradyne and KLA. The managers added six new positions and exited eight during the quarter, diversifying away from concentrated AI exposure to create a more balanced growth profile. New additions included industrial companies Quanta Services, Hubbell, Old Dominion Freight, and Waste Connections, positioning for potential economic broadening beyond AI. Key risks include concentrated market returns tied to AI while the broader economy remained sluggish, elevated inflation pressuring consumers, and supply chain disruptions from tariffs. Looking ahead, the managers are relatively optimistic about 2026, believing that if economic growth broadens beyond AI-dominated large caps, mid-cap stocks could lead markets higher given their innovative positioning and long growth runways.
The fund pursues long-term outperformance by owning a concentrated portfolio of 35 to 45 high-quality U.S. mid-cap stocks with the potential for long-term growth and business resiliency, focusing on innovative, industry-leading companies with large addressable markets.
We're relatively optimistic heading into 2026. If economic growth broadens beyond AI, an area dominated by the world's largest companies, we believe that mid-caps could lead the market higher. Our holdings are innovative, industry-leading companies with large addressable markets and long runways for growth, and 2026 could bring the environment that enables them to flourish.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | ALC, APP, BILL, BLDR, DASH, GWW, HLT, HUBB, INSM, MORN, MPWR, ODFL, PWR, ROK, SN, SQ, TEAM, TER, WCN, WDAY | AI, growth, industrials, mid cap, portfolio, semiconductors, technology |
SNDK TER KLA ROK MTD |
The ongoing AI megatrend boosted demand for memory and storage while industry supply growth remained constrained. Holdings in Information Technology sector were dominant contributors through… |
| Oct 15 2025 | 2025 Q3 | APP, CMG, GWW, HOOD, ICLR, JBHT, KLA GR, MELI, MORN, ODFL, PODD, SNDK, TEAM, TER, TTD, VRSK | Artificial Intelligence, industrials, Nearshoring, semiconductors, software | - | The fund attributes outperformance to AI-related semiconductor and software positions, emphasizing the ongoing megatrend driving system-on-chip, testing, and storage demand. Managers highlight new exposure to… |
| Jun 30 2025 | 2025 Q2 | - | Artificial Intelligence, diversification, innovation, Market share, Mid Caps | - | The letter highlights mid-cap companies benefiting from AI adoption, cyclical recovery, and structural market share gains. Management stresses diversification across multiple growth vectors to avoid… |
| Apr 14 2025 | 2025 Q1 | APP, ARES, BILL, BLDR, BR, CMG, CTAS, DDOC, FTNT, GWRE, HOOD, ICLR, KLAC, MELI, NTRA, ORLY, ROST, SNDK, TER, TTD, VRSK, WST, XYZ | - | - | - |
| Dec 31 2024 | 2024 Q4 | A, ADYEY, ALGN, CSGP, DDOG, EFX, FTNT, GWRE, IDXX, KLAC, MELI, MTD, ODFL, PCOR, PGR, POOL, ROK, SHW, SQ, TEAM, TT, XYZ | - | - | - |
| Oct 28 2024 | 2024 Q3 | ADSK, ARNB, BILL, BIRK, GWRE, H, IBKR, IQV, JBHT, LPLA, MRNA, MTN, NET, NTR, ONON, RRR, SHOP, SPOT, TSLA | - | - | - |
| Jul 12 2024 | 2024 Q2 | ADYEN NA, BILL, BMRN, CPRT, CSGP, GWRE, KLAC, LULU, MPWR, MSCI, POOL, SLNY, SQ, TER, TT, WDAY, WDC, WST | - | - | - |
| Apr 27 2024 | 2024 Q1 | ADYEY, BMRN, KLAC, LULU, MELI, MTD, NTR, PGR, SQ, TT, WDAY | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
SemiconductorsTaiwan Semiconductor represents the dominant manufacturer for leading fabless chip designers including NVIDIA, Apple, and Broadcom. The global arms race to develop artificial general intelligence will support multiple years of robust growth for foundries with leading-edge capabilities. |
Foundries Advanced Process AI Chips Manufacturing Technology Leadership | |
| 2025 Q3 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
| 2025 Q2 |
Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 18, 2026 | Fund Letters | Ian Sexsmith | SNDK | SanDisk Corporation | Information Technology | Semiconductors | Bull | NASDAQ | AI infrastructure, Memory, Semiconductor Cycle, Storage Pricing | Login |
| Jan 18, 2026 | Fund Letters | Ian Sexsmith | TER | Teradyne, Inc. | Information Technology | Semiconductor Equipment | Bull | NASDAQ | AI chips, Capital Spending, market share, Semiconductor Testing | Login |
| Jan 18, 2026 | Fund Letters | Ian Sexsmith | KLA | KLA Corporation | Information Technology | Semiconductor Equipment | Bull | NASDAQ | AI manufacturing, process control, semiconductor equipment, Yield Management | Login |
| Jan 18, 2026 | Fund Letters | Ian Sexsmith | ROK | Rockwell Automation, Inc. | Industrials | Industrial Automation | Bull | New York Stock Exchange | Cyclical Recovery, Industrial automation, margin expansion | Login |
| Jan 18, 2026 | Fund Letters | Ian Sexsmith | MTD | Mettler-Toledo International Inc. | Health Care | Life Sciences Tools & Services | Bull | New York Stock Exchange | Life Sciences Tools, Pricing power, Recurring Demand | Login |
| TICKER | COMMENTARY |
|---|---|
| APP | AppLovin provides tools that help mobile app developers, particularly mobile game developers, market and monetize their products. We exited AppLovin after significant price appreciation. |
| BILL | We rebalanced this allocation by exiting positions in billing digitalization (AVDX and BILL). |
| BLDR | This is the largest supplier of building materials in the United States. They sell lumber and prefabricated products such as trusses and millwork to homebuilders, often helping the builders improve efficiency. The company has been buying up industry competitors. We bought a small amount of stock in 2024 at the price of US$149 per share. I estimated this represented approximately 12 times earnings. However, lumber prices and home building activity are cyclical, and both continued to decline from elevated levels after the COVID-19 crisis. I still like the company and the investment idea. I think the company will benefit from continued industry consolidation. The stock is currently trading at US$105 which is about 17 times earnings. I believe the company's earnings could be temporarily depressed but we have not yet bought more shares. Builders FirstSource is now one of our smallest investments. |
| DASH | DoorDash Inc. operates a commerce platform that connects merchants, consumers, and independent contractors. reported better-than-expected quarterly results. However, management announced a significant increase in planned investments for 2026, which led to a -17% decline in its share price. |
| GWW | One of the new entrants into the portfolio was W.W. Grainger, a North American distributor of industrial consumables, tools and supplies. We have previously owned this name in the portfolio and followed closely for many years. The driver to re-introduce to the portfolio now is an attractive valuation and view that an up-cycle seems imminent. Our modelling calls for double digit revenue growth and mid-teens EPS CAGR over the next few years, together with good potential for multiple expansion as earnings accelerate. W.W. Grainger has a solid moat allowing for pricing and market share gains on top of the industrial production growth. Its profitability (GPM, OPM, RoCE and cash conversion) is in the top-quintile relative to peers and financial leverage is low, which allows for generous shareholder returns. |
| HLT | New position in global hospitality company Hilton. |
| HUBB | Hubbell designs, manufactures and sells electrical and electronic products. We saw an attractive entry point for Hubbell, which plays a key role in the AI data center build-out and resulting electrical grid upgrades. |
| INSM | Insmed Inc., a biopharmaceutical company focused on developing and commercializing therapies for patients with rare diseases, advanced 21% over the quarter. We have been pleased with the launch of Brensocatib, a first-in-class oral medication that treats non-cystic fibrosis bronchiectasis. The reception has been positive from physicians, patients, and payers. |
| MPWR | During the quarter, we also initiated a position in Monolithic Power Systems, Inc. (MPS), which designs semiconductor chips that control and deliver power inside electronic systems. Its products ensure that processors, memory, and sensors receive the precise power they need, safely and efficiently. MPS has built a leadership position in power management through deep system-level design expertise and highly integrated solutions that combine multiple functions into compact, high-performance devices. MPS is positioned to benefit from two major long-term shifts: the redesign of data centers for AI and the transformation of vehicle electrical architectures. |
| ODFL | Rotated exposure from Old Dominion Freight Line, a leading less-than-truckload (LTL) carrier. |
| PWR | Quanta Services is a leading infrastructure solutions provider for electric power, renewable energy and telecommunications. The company is a key enabler of electrification and grid modernization with a long runway for growth. |
| ROK | Rockwell Automation is the pure-play bet on factory digitization. Its moat is sticky, mission-critical automation software and hardware that enable manufacturers to boost efficiency, safety, and uptime. Secular tailwinds—reshoring, labor shortages, electrification, and physical AI-driven industrial automation—give it years of demand runway. With recurring revenue growth, strong pricing power, and capital-light margins, ROK is a high-quality compounder in a world where industrial efficiency is gold. |
| SN | SharkNinja is a leading consumer products company with brands spanning cleaning, beauty and kitchen appliances. We ended our multiyear campaign in SharkNinja during the quarter. The company continues to deliver one of the most innovation-driven profit cycles in the consumer spending sector, but we exited the position in line with our valuation discipline. |
| SQ | Block operates the Square platform that facilitates merchant payments and the Cash App platform that allows individuals to send and receive money. We exited Block due to our concerns around management's execution. |
| TEAM | We sold Atlassian, which produces collaboration software, as we reduced our overweight exposure to software because we feel that AI has widened the range of outcomes for predominantly seat-based revenue models. |
| TER | The fund's allocations to semiconductor equipment companies Teradyne and Applied Materials contributed positively to performance during the quarter, following a strong overall period for semiconductor capital equipment companies. Teradyne's strong price appreciation was led by an increased demand for semiconductor testing equipment, fueled by booming demand for AI accelerators and memory. Its management team also reported strong results for the third quarter of 2025 and issued optimistic guidance for future business with significant revenue growth year over year. |
| WCN | Our lone position in Utilities, Waste Connections, Inc. (WCN), was flat for the quarter but the stability of the company's earnings and cash flows provided the downside capture we've come to expect. |
| 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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