Growing pains support a downgrade of Easterly Asset Management’s Parent rating to Below Average from Average.
The firm continues to pursue an acquisition-driven growth strategy, most recently announcing in March 2026 the purchase of Olstein Capital Management’s fund business, to be integrated with its earlier Snow Capital acquisition. While the transaction is relatively straightforward and adds roughly USD 500 million in assets across overlapping value-oriented mandates, the April 2024 acquisition of two municipal-bond funds from Principal Street Partners exposed gaps in the firm’s due diligence and risk management. Following the acquisition of Principal Street’s municipal-bond funds, its high-income muni fund suffered a sharp drawdown in June 2025, with its net asset value falling 32% in one day and more than 58% peak to trough amid liquidity and valuation issues. That fund is now being liquidated, with the ongoing process complicated by litigation.
Easterly has since enhanced its risk framework, including more formalized firmwide reporting, expanded diligence, and greater oversight from an internally designated head of risk. However, these changes are recent and untested. While investment teams retain autonomy—typical for a multi-affiliate model—centralized due diligence appeared insufficient for a platform expanding through varied acquisitions.
Fees also remain a constraint. Half of the firm’s 20 share classes are priced above Morningstar averages, including six in the highest-fee quintile and none in the lowest-cost cohort, creating a performance hurdle for investors.
Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Easterly Funds (Branding Name ID: BN00000N1C), is covered by Morningstar Manager Research.
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