T. Rowe Price Q3 Revenue Rises as Net Outflows Reach $28.3 Billion

T. Rowe Price Group reported higher third-quarter revenue and adjusted earnings as average assets under management increased, but the asset manager also recorded $28.3 billion of net outflows, led by equity strategies and U.S. clients.

Net revenue rose 5.9% from a year earlier to $2.00 billion in the quarter ended September 30, 2026. Adjusted net revenue increased 5.3% to $2.01 billion, while adjusted diluted earnings per share rose to $2.86 from $2.81. On a U.S. GAAP basis, diluted EPS declined to $2.79 from $2.87, and net income attributable to T. Rowe Price Group was $612.3 million.

The company’s GAAP operating income climbed to $769.8 million from $643.2 million, lifting its operating margin to 38.4% from 34.0%. Adjusted operating income increased to $809.2 million from $774.1 million, while the adjusted operating margin edged down to 40.3% from 40.6%.

Outflows rise as equity redemptions persist

Quarterly net outflows widened from $7.9 billion a year earlier and $6.5 billion in the second quarter. Equity strategies accounted for $25.6 billion of third-quarter outflows, while multi-asset products lost $7.6 billion. Those redemptions were partly offset by $3.4 billion of fixed-income inflows and $1.5 billion of alternatives inflows. Alternatives flows included $1.2 billion of manager-driven distributions.

Institutional clients withdrew a net $18.8 billion, and retail clients accounted for $9.5 billion of outflows. U.S. clients recorded $28.6 billion of net redemptions, while clients in Asia-Pacific, Europe, the Middle East, Africa and Canada contributed $300 million of net inflows.

Target-date products had $6.5 billion of net outflows, including a large redemption from a defined-contribution plan. Target-date assets stood at $614 billion, while U.S. defined-contribution assets totaled $842 billion. Retirement assets represented 64% of firmwide AUM.

Ending AUM was $1.86 trillion, up from $1.77 trillion a year earlier but below $1.89 trillion at the end of the second quarter. Average AUM increased to $1.89 trillion from $1.72 trillion in the prior-year period, supporting higher advisory revenue despite continued pressure on the effective fee rate.

Investment advisory fees rose to $1.80 billion from $1.70 billion and represented about 90% of net revenue. The effective fee rate excluding performance-based fees declined to 37.8 basis points from 39.1 basis points a year earlier and 38.1 basis points in the previous quarter.

Capital allocation-based income, which primarily reflects changes in accrued carried interest, was $59.9 million on a GAAP basis and $63.1 million after non-GAAP adjustments. The company said changes in accrued carried interest can fluctuate from quarter to quarter. About $23 billion of alternatives fee-basis AUM was eligible to earn carried interest at quarter-end, and approximately half of accrued carried interest is generally expected to be retained in operating income, with the remainder recognized as compensation expense.

Expenses remain controlled as ETF business expands

Adjusted operating expenses were $1.20 billion, up 5.8% from a year earlier but down 0.3% sequentially. For the first nine months of 2026, adjusted operating expenses excluding carried-interest compensation increased 4.0% to $3.51 billion.

T. Rowe Price’s exchange-traded fund business continued to attract assets despite firmwide outflows. ETFs generated $3.8 billion of net inflows during the third quarter and $11 billion in the first nine months of 2026, bringing ETF AUM to $33.8 billion. The firm had 39 ETFs at September 30, including six launched during the quarter, and 11 had surpassed $1 billion in AUM.

Investment results were mixed across measurement periods. Among eligible U.S. funds, 60% outperformed their Morningstar category median over one year and 61% did so over 10 years. Measured by AUM, those figures were 57% and 69%, respectively. Performance against passive peers and composite benchmarks was weaker in several periods, and the company noted that past performance does not guarantee future results.

T. Rowe Price ended the quarter with $4.93 billion in cash and discretionary investments. It returned $285 million to shareholders through dividends during the quarter and reported no share repurchases. The quarterly dividend remained $1.30 per share.

The key uncertainties indicated by the presentation include sustained net redemptions, a lower effective fee rate and quarter-to-quarter volatility in carried interest. The company also cautioned that market conditions, investment performance, product demand, regulatory developments and changes in AUM could cause future results to differ materially from current expectations.