Asset manager T Rowe Price (NASDAQ: TROW) reported an 11% jump in second-quarter adjusted profit on Friday, helped by a relentless market rally that has boosted the value of clients’ investments and softened the hit from an outflow of funds.
The growing popularity of low-cost, passively managed funds has taken market share away from active managers such as T Rowe. The company has seen 13 consecutive quarters of outflows.
The market rally helped T Rowe’s assets under management (AUM) withstand the onslaught. At the end of the quarter, the company’s AUM, which determines its fees, grew 12% to $1.57 trillion despite $3.7 billion of net outflows.
“We are making steady progress with flows and investment performance … continue to be on track to substantially reduce net outflows this year,” CEO Rob Sharps said. Outflows in the first quarter stood at $8 billion.
Some analysts believe the high interest rate environment could help active managers stage a comeback after years of losing out to their passive counterparts.
Investors will have to adopt a more hands-on strategy to add value to their portfolios and manage risk, in contrast to the set-and-forget approach that has defined asset management over the past decade, they have said.
T Rowe’s (NASDAQ: TROW) investment advisory fees, typically a percentage of AUM, jumped 11% to $1.59 billion.
Adjusted profit rose to $519.7 million, or $2.26 per share, for the three months ended June 30, compared with $466.5 million, or $2.02 per share, a year earlier.
(Source: Reuters)
Maria Reed is a financial journalist with a passion for covering US equities. She joined the ABBO News team in June 2023. Maria holds an M.S. degree in International Economics and Finance from Otto-von-Guericke University in Magdeburg and is a CFA Level 2 candidate.
