T. Rowe Price Group NASDAQ: TROW reported second-quarter 2026 adjusted diluted earnings per share of $2.57, up from $2.52 in the first quarter and $2.24 a year earlier, as higher average assets under management and investment advisory revenue outweighed increased expenses.
The asset manager ended the quarter with $1.9 trillion in assets under management and $6.5 billion in net outflows. Chair and CEO Rob Sharps said markets rebounded during the quarter after a difficult beginning to the year, while fundamental active equity strategies remained under pressure. He said the company expects that pressure to continue in the second half of 2026.
However, T. Rowe Price recorded positive flows in May and June, including a large defined-contribution investment-only mandate for its hybrid target-date series in May and a large sub-advisory mandate in research and integrated equity strategies in June. The company also reported positive client flows in Europe, the Middle East and Africa, as well as Asia-Pacific.
Revenue Growth and Expense Outlook
Chief Financial Officer Jen Dardis said adjusted net revenue was $1.9 billion in the second quarter, increasing 2.7% from the first quarter and 8.5% from the prior-year period. Investment advisory revenue totaled $1.7 billion, rising from both comparison periods on higher AUM.
The company’s annualized effective fee rate, excluding performance-based fees, declined to 38.1 basis points from 38.4 basis points in the first quarter. Dardis attributed the continuing fee-rate pressure to asset and vehicle mix changes, client demand for lower-fee strategies and vehicles, and redemptions from higher-fee equity strategies and mutual funds.
Adjusted operating expenses were $1.2 billion, up 4.2% sequentially and 4.9% year over year. The increase reflected higher market-driven costs, product and record-keeping expenses, and nonrecurring general and administrative costs. Higher technology, occupancy and facilities expenses also contributed to the year-over-year increase, partly offset by savings initiatives.
Based on average AUM and revenue trends in the first half, T. Rowe Price now expects full-year adjusted operating expenses, excluding carried-interest expense, to rise 4% to 7% from 2025’s $4.6 billion. Dardis said the company intends to continue investing in ETFs, separately managed accounts, outcome-oriented products, advice-led offerings and artificial intelligence while aiming to keep controllable expense growth in the low single digits.
During the quarter, T. Rowe Price repurchased $157 million of stock, bringing year-to-date repurchases to more than $497 million, or nearly 2.5% of shares outstanding. The company ended the quarter with 213.3 million shares outstanding and $4.4 billion in cash and discretionary investments.
Strategic Focus on ETFs, SMAs and Alternatives
Sharps said T. Rowe Price is pursuing growth across fixed income, alternatives, ETFs, SMAs and direct platforms, while continuing to support its active equity franchise. Direct active equity accounts for about $900 billion of the company’s AUM, he said, and remains important despite continued outflows.
The company’s integrated equity and fixed-income strategies, which combine fundamental research and quantitative insights, represent about $200 billion in AUM and generated $16 billion in net inflows year to date. T. Rowe Price launched two lower-tracking-error active core equity ETFs earlier this year.
The ETF platform expanded to 34 funds with $30 billion in AUM, including $4.4 billion of net inflows during the second quarter. In June, the company launched the T. Rowe Price Capital Appreciation Market Opportunities ETF. In mid-July, it launched the T. Rowe Price Active Crypto ETF, an actively managed multi-token exchange-traded product and the firm’s first non-investment-company ETF.
Sharps said the pace of U.S. ETF launches is expected to slow as the firm focuses more heavily on scaling its existing lineup. He identified ETF use as building blocks in wealth-management model portfolios as a major opportunity. President, Co-Head of Global Investments and CIO Eric Veiel added that the company is building relationships with technology providers and platforms to expand its reach in both customized and off-the-shelf models.
The separately managed account business included 43 products and $20 billion in AUM at quarter-end. Sharps said the company was a late entrant to the market but has placed strategies with 35 sponsors and plans to launch its own tax-efficiency capability with a vendor partner.
T. Rowe Price also advanced its alliance with Goldman Sachs. The firms launched the T. Rowe Price Goldman Sachs Private Markets Fund, their first interval fund collaboration, on July 1. A public-private equity interval fund is in registration and expected to launch later this year. Sharps said the firms have also launched five model portfolios that are approaching $500 million in AUM.
Investment Results and Second-Half Flows
Veiel said more than half of T. Rowe Price funds outperformed their Morningstar peer groups over one-, three- and 10-year periods, while 44% outperformed over five years. On an asset-weighted basis, 79% of funds outperformed over 10 years, compared with 44%, 57% and 43% over one, three and five years, respectively.
Fixed-income performance was stronger on an asset-weighted basis, with more than 75% of funds outperforming in each reported period. Veiel highlighted global multi-sector, institutional floating-rate and several municipal strategies for top-quartile three-, five- and 10-year results.
Sharps cautioned that net flows will become “meaningfully more challenging” in the second half. He cited continued active-equity outflows, the absence of the large mandates that supported first-half results, expected portfolio rebalancing away from equities after market gains, and a late-stage lull in the target-date pipeline.
Still, he said the company expects 2026 to be a record year for gross flows, supported by client demand across lower-tracking-error strategies, active ETFs, fixed income, alternatives and international markets.
About T. Rowe Price Group (NASDAQ:TROW)
T. Rowe Price Group, Inc is a global investment management firm headquartered in Baltimore, Maryland, founded by Thomas Rowe Price Jr. in 1937. The company provides a broad range of investment products and services for individual investors, financial intermediaries, retirement plan sponsors and institutional clients. Its offerings are built around active investment management and in-house research across equity, fixed income and multi-asset strategies, reflecting a long history as a research-driven asset manager.
The firm's product lineup includes mutual funds, separate accounts, collective investment trusts, target-date and target-risk funds, and managed account solutions, as well as services for defined contribution and defined benefit retirement plans.
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