3 Parnassus Mutual Funds to Buy Amid Performance Divergence

Parnassus Investments, a pioneer in sustainable investing, has built its reputation around high-quality companies with durable competitive advantages, attractive valuations and responsible business practices. However, the fund family has faced challenges in recent years, reflecting uneven investment performance and waning investor demand for sustainable investment strategies. Despite these headwinds, its recent performance picture is mixed, with stronger returns among large-cap strategies contrasting with persistent weakness in mid-cap offerings.

Parnassus managed approximately $41 billion in assets as of February 2026. The firm has, in recent years, sharpened its focus on U.S. large-cap equities, expanding its investment team and broadening its offerings to include actively managed exchange-traded funds. The firm’s latest returns through Oct. 9, 2026, highlight the divergence across its investment strategies. Its large-cap offerings have generally delivered stronger year-to-date results than its mid-cap strategies. Parnassus’ growth and value-oriented approaches have benefited from different market opportunities, while its mid-cap investments have encountered greater difficulties.

Recent quarterly results also underscore the challenges of sustaining performance in a volatile market. Parnassus Core Equity fell 0.51% in third-quarter 2026 versus the S&P 500 Index’s 2.30% gain, while its Mid Cap Fund dropped 9.72%, trailing the Russell Midcap Index’s 3% decline. Weakness in technology and materials weighed on large-cap core investments during the third quarter, while mid-cap strategies experienced more pronounced declines.

Astute investors might choose to consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, as well as carry a low expense ratio.

Parnassus Mid Cap Growth Investor PARNX primarily invests in mid-cap growth companies but may retain holdings outside its benchmark’s capitalization range and invest in smaller- and larger-capitalization stocks.

Ian Sexsmith has been the lead manager of PARNX since 2013. The three top holdings for PARNX are Teradyne (4.5%), Datadog (4%) and Rockwell Automation (3.6%).