T. Rowe Price quarterly profit beats estimates on boost from market rally
WHY IT'S IMPORTANT
Stock markets bounced back sharply in the second half of the quarter after tariff-driven turmoil in April as progress on trade negotiations eased recession fears.
Assets under management mainly depend on two factors - the performance of investments and money flowing in and out of the funds.
KEY QUOTE
"We have developed a broad and ongoing plan to reduce our expense growth over time while continuing to invest in capabilities and client reach. We believe that our plan will drive efficiency to fund investment in the future of the business," CEO Rob Sharps said in a statement.
CONTEXT
Active asset managers like T. Rowe usually buy and sell investments more frequently than passive fund managers.
Such firms have ceded market share and grappled with consistent outflows in recent years due to the growing popularity of low-cost passive funds, which centers around investing in index-tracking funds.
BY THE NUMBERS
T. Rowe's assets under management jumped 6.9% to $1.68 trillion in the quarter despite net client outflows of $14.9 billion.
Investment advisory fees, typically a percentage of the AUM, came in flat at $1.57 billion.
On an adjusted basis, T. Rowe earned $2.24 per share in the quarter, beating Wall Street expectations of $2.13, according to estimates compiled by LSEG.
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