We're downgrading its Parent rating to Average from Above Average.
Jackson Square spun out of Delaware Investments in May 2014, but the investment team's history goes back to the 1990s when its senior members worked together at Transamerica. They developed a consistently executed concentrated growth equity strategy that worked well over time. The portfolio managers have lots of their own money invested in the funds they manage, and 15 of the 32 employees are partners in the firm. Jackson Square's strategies underperformed dramatically in 2021 and the first half of 2022, leading to heavy outflows from the firm's mutual funds as well as its institutional accounts. As a result, the firm's asset base shrank from $21 billion in mid-2020 to $6 billion in mid-2022, mostly as investors left the firm’s two most-popular strategies. Meanwhile, between August 2021 and August 2022, it will have liquidated two of its five mutual funds; those failed to gain and sustain traction with investors. The firm remains financially stable, and asset-manager investor AMG in 2020 took a large minority stake in the firm from previous part-owner Macquarie Group. The team has not made changes to its process, but its strategies now look riskier than previously thought, with less downside protection.