T. Rowe Assets Hit Record as Outflows Narrow
Ending assets under management reached a record $1.893 trillion as quarterly outflows fell by more than half.
Price T. Rowe Group (TROW), the global asset-management franchise, ended the second quarter with a record $1.893 trillion under management, up 10.7% QoQ and 12.9% YoY. The increase reversed the first quarter’s 3.7% sequential decline and restored the asset base that drives advisory-fee revenue.
Client redemptions also eased for a second consecutive quarter. Net outflows narrowed to $6.5 billion from $13.7 billion in the first quarter and $25.5 billion in the fourth quarter of 2024, and flows turned positive in May and June.
Equities remained the principal source of pressure, with $13.5 billion of outflows, though that improved from $22.6 billion in the prior quarter. Fixed income drew $4.6 billion, alternatives added $2.0 billion and multi-asset strategies recorded $400 million of inflows, broadening the offset to equity redemptions.
Higher markets and improving flows lifted average AUM 3.5% QoQ and 15.7% YoY to $1.838 trillion, supporting an 11.3% YoY increase in investment advisory fees to $1.745 billion. Multi-asset led the advance, with average AUM up 21.5% YoY and related fees rising 16.1% to $529.5 million.
The asset mix continued to weigh on pricing. The advisory effective fee rate excluding performance fees declined 0.3 basis points QoQ and 1.5 basis points YoY to 38.1 basis points as client activity shifted assets toward lower-fee products and asset classes. Performance-based fees fell 13.3% QoQ to $6.5 million, while weaker relative performance in credit strategies reduced capital allocation-based income to $11.9 million from $28.1 million.
Net revenue rose 2.7% QoQ and 10.7% YoY to $1.907 billion, though higher costs absorbed much of the sequential gain. Adjusted operating expenses increased 4.2% QoQ to $1.203 billion, driven partly by a higher interim bonus accrual, leaving adjusted net operating income nearly flat at $709.1 million.
Capital returned through dividends and share repurchases declined about 30% QoQ to $441 million from $629 million.
The positive flow readings in May and June provided the clearest forward indicator after successive quarters of moderating redemptions. Sustaining that turn would determine how much of the record asset base translated into organic fee growth as pricing remained under pressure.