| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.31% | -7.03% | -7.03% |
Parnassus Mid Cap Growth Fund returned -7.03% in Q1 2026, underperforming the Russell Midcap Growth Index's -6.35% return. Performance was hampered by holdings in Industrials, Health Care, and Financials, while Information Technology holdings provided strong outperformance. The fund actively repositioned during the quarter, diversifying away from companies vulnerable to AI disruption toward those with durable business models. Key contributors included semiconductor-related names like Teradyne, KLA, and Hubbell, which benefited from AI infrastructure demand, while software companies like BILL Holdings faced headwinds from AI disruption concerns. The managers added eight new positions including Dick's Sporting Goods, Reddit, and housing-related names like Builders FirstSource, anticipating cyclical recovery. They exited several positions due to AI disruption risks and other concerns. Despite macro uncertainty and geopolitical tensions, the team remains constructive on mid cap growth, expecting economic growth to broaden beyond AI and volatility to create opportunities where sentiment diverges from fundamentals.
Focus on best-in-class, innovative companies with large addressable markets and long runways for growth while reducing exposure to AI disruption risks
Remaining constructive on mid cap growth equities despite increased macro uncertainty and geopolitical tensions. Optimistic that economic growth could broaden beyond AI with encouraging opportunity set in companies gaining market share with identifiable growth drivers. Expect periods of volatility to create opportunities where market sentiment diverges from fundamentals.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 17 2026 | 2026 Q1 | ARES, BILL, BLDR, CSGP, DKS, EW, HOOD, HUBG, KLAC, ODFL, RDDT, RKLB, ROK, TER, VMC | AI, growth, Housing, industrials, mid cap, semiconductors, technology | - | Parnassus Mid Cap Growth underperformed in Q1 2026 as managers actively repositioned away from AI disruption risks toward durable business models. Semiconductor infrastructure names outperformed while software faced headwinds. Added eight positions including retail and housing plays anticipating cyclical recovery. Despite macro uncertainty, team remains constructive on broadening growth beyond AI creating selective opportunities. |
| 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 |
Parnassus Mid Cap Growth outperformed in Q4 despite negative returns, driven by AI-exposed semiconductor holdings. The fund diversified away from concentrated AI exposure by adding industrial companies positioned for economic broadening. Managers remain optimistic about 2026, believing mid-caps could lead if growth expands beyond AI-dominated large companies to benefit their innovative, industry-leading portfolio companies. |
| Oct 15 2025 | 2025 Q3 | APP, CMG, DDOG, EFX, GWRE, GWW, HLT, HOOD, ICLR, JBHT, KLAC, MELI, MORN, MPWR, NET, ODFL, PODD, SNDK, TEAM, TER, TTD, VRSK | AI, Cyclical, growth, mid cap, semiconductors, technology, value | - | Parnassus Mid Cap Growth outperformed in Q3 2025 on strong Information Technology holdings, particularly AI-beneficiary semiconductors like Sandisk and Teradyne. The managers maintain dual positioning in direct AI plays and cyclically depressed names poised for recovery. With economic outcomes uncertain, the portfolio balances growth momentum with value opportunities in out-of-favor industrials and financials. |
| Jun 30 2025 | 2025 Q2 | ALC, ALNY, BLDR, CSGP, DDOG, EFX, GWRE, HLT, HOOD, JBHT, KLAC, MELI, NET, ODFL, POOL, RCL, RGEN, SARO, SN, WDC | AI, Cyclical, growth, Logistics, mid cap, semiconductors, software | - | Parnassus Mid Cap Growth underperformed this quarter despite strong AI-related holdings like Cloudflare and Robinhood. Transportation and construction names weighed on performance amid sluggish freight cycles and high mortgage rates. The fund maintains AI exposure while positioning for cyclical recovery in housing and logistics, adding diversified holdings less correlated with AI trends. |
| Apr 14 2025 | 2025 Q1 | A, APP, ARES, BILL, BLDR, BR, CMG, CTAS, DDOG, EFX, FTNT, GWRE, HLT, HOOD, ICLR, JBHT, KLAC, MELI, NTRA, ODFL, ORLY, ROST, SQ, TER, TTD, VRSK, WDAY, WST | AI, growth, Housing, industrials, Logistics, mid cap, semiconductors, technology | - | Parnassus Mid Cap Growth underperformed in Q1 as AI concerns and macro uncertainty pressured growth stocks. Managers opportunistically added eight new positions during the selloff, including disruptive companies like Robinhood and AppLovin at attractive valuations. Despite maintaining thematic focus on cyclical sectors still in rolling recessions, the fund believes recent additions position it well for the next market rally. |
| Dec 31 2024 | 2024 Q4 | A, CSGP, DDOG, EFX, FTNT, GWRE, IDXX, JBHT, KLAC, MELI, MTD, ODFL, PCOR, PGR, POOL, ROK, SHW, SQ, TEAM, TT | Automation, Freight, growth, industrials, mid cap, Quality, semiconductors, technology | - | Parnassus Mid Cap Growth underperformed in Q4 as quality emphasis clashed with momentum-driven markets, though delivered solid annual returns. The fund maintains concentrated thematic bets on semiconductors, life sciences tools, and freight transportation, viewing current holdings as coiled springs positioned for cyclical recovery. Managers express strong confidence in portfolio prospects despite near-term headwinds. |
| Oct 28 2024 | 2024 Q3 | A, ADSK, BILL, CDNS, EFX, GWRE, IQV, JBHT, KLAC, LPLA, MELI, MTD, NET, NTR, ROST, SHW, TEAM, TER, TT, WDC | growth, healthcare, mid cap, Quality, semiconductors, software, technology, Transportation | - | Parnassus Mid Cap Growth outperformed with 8.55% quarterly return through concentrated quality positioning in semiconductors, software, life sciences tools, and transportation. Strong stock selection led by Guidewire's cloud migration success and strategic additions of Autodesk and Cloudflare. Positive outlook supported by Fed rate cuts and global stimulus, though monitoring geopolitical risks while emphasizing quality factors and competitive advantages. |
| Jul 12 2024 | 2024 Q2 | ADYEY, ALGN, ALNY, BILL, BMRN, CPRT, CSGP, EFX, GWRE, KLAC, LULU, MPWR, MSCI, POOL, SQ, TER, TT, WDAY, WDC, WST | AI, growth, Housing, Life Sciences, mid cap, semiconductors, software, technology | - | Parnassus Mid Cap Growth matched its benchmark with a -3.20% Q2 return, driven by strong semiconductor and software performance offset by real estate weakness. The fund maintains thematic overweights in semiconductors, software, life sciences tools, and housing, viewing three as coiled springs. Despite economic uncertainty, managers retain balanced positioning expecting Fed cuts and post-election reacceleration to drive upside. |
| Apr 27 2024 | 2024 Q1 | A, ADYEN.AS, ANSS, BALL, BMRN, CSGP, EFX, GWRE, KLAC, LRCX, LULU, MELI, NTR, PGR, PTC, SNPS, SQ, TEAM, TT, WDAY | AI, growth, healthcare, mid cap, semiconductors, software, technology | - | Parnassus Mid Cap Growth underperformed in Q1 2024 due to Consumer Discretionary and Health Care stock selection, despite strong Information Technology performance. The Fund maintains overweight positions in software, semiconductors, and life sciences tools while taking a balanced stance amid rising valuations. Managers focus on high-quality growth compounders positioned for secular growth opportunities. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI remains a key driver of market returns but is reshaping competitive dynamics across industries. The fund diversified away from companies vulnerable to AI disruption toward those with durable business models. AI-driven demand benefits semiconductor testing and infrastructure companies like Teradyne and KLA. |
Artificial Intelligence Disruption Infrastructure Semiconductors Technology |
SemiconductorsStrong performance from semiconductor-related holdings including Teradyne, KLA, and Hubbell driven by AI infrastructure demand. Memory supply remains tight with robust demand from data centers and AI workloads supporting companies like Sandisk. |
Memory Testing Equipment Data Centers Infrastructure | |
Data CentersData center expansion drives demand for electrical components and infrastructure. Hubbell benefited from robust data center expansion demand, while memory solutions providers like Sandisk see strong demand from data center and AI workloads. |
Infrastructure Electrical Memory Expansion AI | |
HomebuildersHousing market remains challenged by higher interest rates with prolonged slowdown continuing. However, the fund added positions in Builders FirstSource and Somnigroup anticipating cyclical recovery when housing market rebounds, believing companies are well-positioned for eventual recovery. |
Construction Materials Recovery Cyclical Interest Rates | |
| 2025 Q4 |
Physical AssetsManager emphasizes owning businesses with extraordinary physical assets like railways, irreplaceable real estate, and mineral resources. These assets provide pricing power against currency weakness and inflation, and their functions cannot be replaced by AI. |
Infrastructure Real Estate Railways Minerals Tangible |
AIManager views AI as a serious risk to software companies, noting that AI can reproduce software functions at a fraction of the cost. Questions whether software franchises will become commoditized, with AI potentially 'eating software'. |
Software Technology Disruption Commoditization | |
AgricultureStrong performance from Australian and New Zealand agricultural holdings like Ricegrowers and Fonterra. Manager expects agricultural companies with geographic and cost advantages to be attractive as global middle class grows and demands better quality foods. |
Food Dairy Rice Exports | |
InflationManager positioned for long-term currency devaluation and high structural inflation concerns. Portfolio holdings provide pricing power as guard against currency weakness and long-term inflation through their physical asset base. |
Currency Pricing Power Devaluation | |
Defense SpendingAmerican shipbuilders like Huntington Ingalls benefit from higher spending on vessels and naval systems due to political interest in reviving US shipbuilding capabilities for national security reasons. This will keep shipyards busy for years. |
Shipbuilding Naval National Security | |
| 2025 Q3 |
AIThe portfolio maintains exposure to artificial intelligence through software and semiconductor companies. AI megatrend is boosting demand for memory and storage, particularly ultra-high-capacity drives. Strong demand for AI applications in system-on-a-chip and memory testing is a major growth driver. |
Semiconductors Memory Software Infrastructure |
SemiconductorsSemiconductor stocks led portfolio outperformance this quarter. Semiconductors are the building blocks of all technology, including AI, and the Fund's holdings are well positioned to benefit from the AI megatrend. Companies like Sandisk, Teradyne, and KLA benefited from strong AI-driven demand. |
Memory Testing Equipment AI Infrastructure | |
| 2025 Q2 |
AIThe fund maintains thematic focus on artificial intelligence exposure through software and semiconductor companies. Portfolio includes companies like Guidewire, Autodesk and Cadence that are well positioned with large datasets and existing customer relationships to train AI technology for specific use cases. |
Software Semiconductors Data Technology |
SemiconductorsSemiconductors are viewed as the building blocks of all technology, including AI. The portfolio reflects the view that semiconductor industries should benefit greatly over time as AI adoption continues. Holdings include companies like KLA which reported strong earnings. |
AI Technology Equipment Growth | |
LogisticsPortfolio positioned for cyclical recovery in freight transportation with holdings in companies like J.B. Hunt Transport Services and Old Dominion Freight Line. Despite current sluggish freight cycle, these market share gainers are expected to benefit from eventual demand recovery. |
Transportation Freight Cyclical Recovery | |
TravelInitiated position in Royal Caribbean Cruise Lines due to favorable demographic shifts and the company's differentiation through new, larger ships and private island destinations. The cruise industry is viewed as attractive with demographic tailwinds. |
Cruises Demographics Leisure Recovery | |
| 2025 Q1 |
AIDeepSeek's emergence as a Chinese AI challenger triggered sharp selloffs in AI software and infrastructure stocks. The market faced concerns about slowing AI capex spending, affecting momentum-led growth stocks significantly. |
DeepSeek Software Infrastructure Capex |
SemiconductorsSemiconductor equipment companies like KLA Corporation and Teradyne faced mixed results. While KLA benefited from strong earnings, Teradyne declined due to weak analog and industrial semiconductor demand, though positioned for eventual recovery. |
Equipment Analog Industrial Recovery | |
LogisticsThe portfolio maintains thematic overweight to freight transportation with holdings like Old Dominion Freight Line and J.B. Hunt Transport Services, viewing these as positioned for cyclical recovery despite current rolling recession conditions. |
Freight Transportation Cyclical Recovery | |
HomebuildersHousing remains a key thematic focus with addition of Builders FirstSource, the largest building products distributor. The fund expects continued market share gains and consolidation despite interest rate headwinds. |
Building Products Distribution Market Share Consolidation | |
| 2024 Q4 |
SemiconductorsThe fund maintains a key thematic overweight in semiconductors, identifying innovative, competitively advantaged, market-share gainers that can deliver strong performance over the coming years. Holdings include KLA Corporation, a semiconductor process control solutions provider affected by the industry's cyclical downturn and geopolitical risks including U.S.-China export restrictions. |
Semiconductor Cycle Semi Equipment Geopolitical |
Life Science ToolsThe fund maintains a thematic overweight in life sciences tools, viewing this as an industry with long-term prospects for growth. Holdings include companies like Mettler-Toledo International, a leading scientific instrument manufacturer, though modest sales growth weighed on performance during the quarter. |
Life Science Tools Scientific Instruments Healthcare | |
Freight TransportationThe fund increased exposure to freight transportation during the quarter, capitalizing on continued underperformance of Old Dominion Freight Lines and JB Hunt. While freight volumes remained weak through 2024, the managers expect volumes to improve in 2025 and view these as coiled springs positioned for cyclical upturn. |
Trucking Logistics Cyclical Recovery | |
CybersecurityThe fund benefits from secular tailwinds in cybersecurity through holdings like Fortinet, which has seen increasing demand for cybersecurity and platform-based solutions. A major hardware refresh cycle in the second half of 2025 should boost revenue growth for cybersecurity providers. |
Cybersecurity Platform Solutions Hardware Refresh | |
CloudCloud migration remains a key theme with holdings like Guidewire Software successfully executing cloud migration strategy and Atlassian benefiting from transition from on-premise to cloud software. The cloud transition benefits customers with more features and frequent updates while supporting growth. |
Cloud Migration SaaS Software Transition | |
AutomationIndustrial automation represents a growth opportunity with the fund initiating a position in Rockwell Automation, a leader in industrial automation that helps factories manufacture goods more efficiently. The company is expected to benefit as manufacturing projects near completion and automation equipment is installed. |
Industrial Automation Factory Automation Manufacturing | |
| 2024 Q3 |
SemiconductorsFund maintained overweight position despite third quarter underperformance, expecting holdings to benefit as AI moves from data centers to smartphones and laptops. Increasing semiconductor complexity requires more design, capital equipment and testing. |
AI Chip Designers Semi Equipment Memory Testing |
SoftwareAdded Autodesk and Cloudflare while exiting Bill.com. Autodesk's dominant position in architecture, engineering and construction software allows margin expansion and revenue growth. Cloudflare built its own internet network providing lower latency and better security. |
SaaS Enterprise Software Cloud Infrastructure Vertical Software Cybersecurity Software | |
Life Science ToolsMaintained overweight in Life Sciences Tools and Services industry. Sold IQVIA and added to West Pharmaceutical position, believing more upside in West's industry-leading injectables packaging business than IQVIA's clinical research outsourcing. |
Life Science Tools CRO & CDMO Medical Devices Biotechnology Pharmaceuticals | |
TransportationAdded new overweight in Transportation industry with J.B. Hunt, the largest intermodal transportation provider. Well positioned to benefit when freight volumes improve. Continue to own Old Dominion Freight Lines as best managed less-than-truckload provider. |
Trucking Logistics Freight Brokerage Rail Infrastructure Air Freight | |
| 2024 Q2 |
SemiconductorsThe fund maintains an overweight position in semiconductors, which was the most significant contributor this quarter. Holdings include Teradyne, KLA Corporation, and Monolithic Power Systems, all benefiting from AI-driven demand. The fund re-initiated a position in Western Digital to participate in AI via an undervalued memory semiconductor stock. |
AI Memory Semi Equipment Chip Designers Testing |
SoftwareThe fund increased exposure to software during the quarter, adding BILL Holdings as a new position. Despite concerns about slowing economic growth and AI crowding out software spending, the managers have high conviction in their software holdings due to their mission-critical technology, network effects, and high switching costs. |
SaaS Enterprise Software Payments CRM Workflow Automation | |
Life Science ToolsThe fund increased exposure to life sciences tools, adding West Pharmaceutical Services as a new position. While the industry is experiencing a cyclical downturn, drug development continues and quality control remains important. The managers believe it's a matter of time before the cycle turns. |
CRO & CDMO Medical Devices Life Science Tools Biotechnology Pharmaceuticals | |
HousingThe fund maintained its overweight exposure to the housing market despite not yet seeing recovery. With existing home sales at multidecade lows due to structural undersupply, they believe they are well positioned when volumes improve. Holdings include Equifax, Sherwin-Williams, and Pool Corporation. |
Homebuilders Building Materials Retail Home Improvement Mortgage Commercial Real Estate | |
| 2024 Q1 |
AIArtificial Intelligence helped lift earnings, particularly among technology stocks. The revolutionary potential of AI may drive a super-cycle in semiconductors, as AI technology will move from the data center to laptops and smartphones. |
Semiconductors Technology Data Centers Earnings |
SemiconductorsSemiconductors are the building blocks of all technology, including artificial intelligence. The Fund increased its semiconductor overweight as the stocks outperformed and believes AI may drive a super-cycle in the industry. |
AI Technology Equipment Cycle | |
CloudAtlassian is migrating its software from an on-premises offering to the cloud, which is causing quarterly volatility in revenue trends and additional expenses to support both offerings. The Fund expects operating margins to revert to their historical peaks as the migration is completed. |
Software Migration SaaS Margins |
| 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 |
|---|---|
| DKS | Dick's Sporting Goods has expanding competitive advantages driven by its scale, strong vendor relationships and a positive retail experience across its channels. The company recently acquired Foot Locker, which we believe offers meaningful upside over the long term. Dick's is a consistent share gainer that should benefit from longer-term health and wellness tailwinds. |
| RDDT | Reddit has millions of followers who create community-driven network effects that are difficult to replicate. We believe the company will show continued progress in growing users, ramping average revenue per user and licensing its unique data to large language model providers. |
| BLDR | Builders FirstSource is the largest distributor of residential construction materials and components in the U.S., giving it economies of scale. After several years of anemic housing starts, we believe that Builders FirstSource stands to benefit when the housing market inevitably rebounds. Builders FirstSource detracted as the prolonged housing market slowdown continues to extend in this higher-interest-rate environment. Although management provided a weaker-than-expected 2026 sales forecast, we believe the company is well positioned for a housing market recovery when it happens. |
| VMC | Vulcan Materials is the largest U.S. producer of construction aggregates, with leading share in key high-growth regions. We believe the company offers high-quality infrastructure exposure, supported by strong pricing power and vertically integrated operations. |
| EW | Edwards Lifesciences is the leader in structural heart disease, a category defined by large, historically underdiagnosed and undertreated patient populations. Its transcatheter aortic valve replacement technology has become the standard of care for heart disease over open-heart surgery, while its transcatheter mitral and tricuspid therapies business has a long runway for future growth. |
| RKLB | We purchased Rocket Lab to gain exposure to the orbital economy, which we believe offers long-term opportunity as satellite applications like broadband, climate monitoring and security drive sustained demand for launches and space infrastructure. Successfully reaching orbit is extraordinarily difficult, and only a handful of companies have demonstrated reliable launch capability. Rocket Lab is the second-largest provider, with a strong track record of successful missions. |
| TER | Teradyne, a leading provider of semiconductor testing, remains a beneficiary of the AI megatrend, with strong demand for its AI semiconductor testers, which sparked bullish revenue guidance in the first quarter. |
| ODFL | Old Dominion Freight Line demonstrated resilience from freight demand recovery and early signals of industrial stabilization. The company stands to benefit over time from the Trump administration's manufacturing and reshoring efforts. |
| KLAC | KLA, a provider of process control and yield management semiconductor equipment, continues to see sustained demand tied to AI infrastructure spending. |
| HUBG | Hubbell shares rose after the electrical component manufacturer issued a strong 2026 outlook fueled by robust demand for data center expansion from the ongoing AI infrastructure build-out. |
| BILL | BILL Holdings continued to be impacted by uncertainty about small and midsize business spending, while investors worried about the potential negative impact of AI disruption in the software industry. |
| CSGP | CoStar Group weighed on performance. We exited our position due to concerns that management's continued investment in Homes.com may detract from its core commercial real estate business at a time when increased spending on AI could reshape customer demand, potentially reducing growth in its commercial segment. |
| HOOD | Robinhood Markets weighed on returns amid a sharp decline in cryptocurrency trading. We are pleased to see the company gaining market share from a younger generation of brokerage customers and that the company continues to innovate. |
| ARES | Ares Management shares detracted, and we exited the position as recent liquidity pressures and credit concerns at several high-profile borrowers have increased scrutiny on the private credit asset class and could dampen fundraising and investor demand. |
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