T. Rowe Price Group NASDAQ: TROW reported third-quarter 2026 adjusted diluted earnings per share of $2.86, up from $2.57 in the prior quarter and $2.81 a year earlier, as higher average assets under management supported results. The asset manager ended the quarter with $1.86 trillion in assets under management, though it recorded $28.3 billion in net outflows.
Chair and CEO Rob Sharps said the company expects net outflows to improve sequentially in the fourth quarter, although they are expected to remain elevated. He cited continued pressure in active equities and mutual funds but pointed to improving investment performance, expansion of exchange-traded funds, separately managed accounts and model portfolios, as well as growth initiatives in fixed income and alternatives.
Flows and Investment Performance
Chief Financial Officer Jen Dardis said third-quarter outflows were primarily driven by equity strategies and mutual funds. Multi-asset net outflows totaled $7.6 billion, largely reflecting target-date strategies and including a previously disclosed large redemption from a defined-contribution plan in September.
Fixed income and alternatives posted positive flows during the quarter, while the company also saw net inflows from clients in Asia-Pacific. ETF net inflows were $3.8 billion, bringing year-to-date ETF inflows to $11 billion.
Sharps said more than 50% of fund assets outperformed Morningstar peer groups over the one-, three- and 10-year periods, while 44% outperformed over five years. Fixed-income performance remained a particular area of strength, with 85%, 74%, 76% and 82% of fund assets outperforming for the one-, three-, five- and 10-year periods, respectively.
In target-date strategies, 80% of assets outperformed over one and three years, 55% over five years and 98% over 10 years. Sharps attributed the third-quarter results to the retirement glide path’s higher relative equity exposure, a tactical bond underweight and allocations to inflation-mitigating assets.
Looking ahead, Sharps said active-equity and mutual-fund headwinds are expected to persist. He said October was weak but that the company sees a better pipeline for November and December. He also noted that retirement-plan flows have become more uneven as an aging participant base leads to more distributions and rollovers, making growth more dependent on winning new plans.
Revenue, Expenses and Capital
Adjusted net revenue was $2 billion, up 5.3% from the third quarter of 2025 and 5.1% from the second quarter. Investment advisory revenue rose 5.8% year over year to $1.8 billion and increased 3% sequentially, driven by higher average AUM and partly offset by a lower effective fee rate.
Adjusted carried interest totaled $63.1 million, compared with $15.2 million in the second quarter. Dardis said the amount included carry earned on OHA private-credit products and the company’s late-stage venture fund, which launched in the first quarter.
The annualized effective fee rate, excluding performance-based fees, was 37.8 basis points, compared with 38.1 basis points in the prior quarter. Dardis said about two-thirds of the decline reflected growth in target-date blend and hybrid products, with the remainder tied to U.S. equity outflows and vehicle mix changes.
Adjusted operating expenses, excluding carried-interest expense, were nearly $1.2 billion, down 1.6% sequentially and up 5.7% from a year earlier. The company maintained its outlook for 2026 adjusted operating expenses to rise 4% to 7% from 2025’s $4.6 billion and said it was trending toward the middle of that range.
T. Rowe Price ended the quarter with $4.9 billion in cash and discretionary investments. Dardis said the company repurchased approximately 5.3 million shares for just under $500 million during the first half of the year but paused repurchases in the third quarter. Sharps said buybacks remain opportunistic and that the company intends to return excess capital through dividends and repurchases while retaining flexibility for acquisitions, seed investments and product launches.
ETFs, SMAs and Distribution Expansion
Head of Global Distribution Dee Sawyer said ETFs, SMAs and model portfolios are central to the firm’s effort to meet client demand for greater choice, personalization, tax efficiency and control.
The company launched six ETFs in the third quarter, including fixed-income, equity and crypto-focused strategies, bringing its lineup to 39 ETFs. ETF assets under management reached $33.8 billion, up from $6.9 billion two years earlier, with more than $23 billion of net flows over that period. Sawyer said 11 ETFs now have more than $1 billion in assets and that T. Rowe Price has become the 13th-largest active ETF manager.
The company also began expanding its active ETF offering outside the U.S., launching Integrated Global Equity and Integrated U.S. Equity Enhanced Index UCITS ETFs in Europe earlier in October. In addition, Robinhood announced plans, pending regulatory approval, to offer tokenized products with economic exposure to T. Rowe Price active ETFs to eligible investors outside the U.S.
Separately managed account assets rose to $20.6 billion at the end of September from $16.8 billion at year-end, aided by $2.2 billion in year-to-date net flows. The firm had roughly 36,000 funded SMA accounts, more than 50% above the prior year, and its strategies were available across 40 wealth and platform relationships.
Sawyer said T. Rowe Price is also increasing investment in its intermediary business, including an additional 50 associates, to support model portfolio distribution and other growth channels.
Acquisition, Partnerships and AI
In August, T. Rowe Price announced plans to acquire fixed-income manager and ETF specialist F/m Investments, which has approximately $20 billion in assets across ETFs, institutional separate accounts and taxable and municipal SMAs. The transaction is expected to close in early 2027.
Sharps said the acquisition is intended to enhance the firm’s fixed-income platform and accelerate ETF and solutions growth. He also said the company is evaluating additional acquisition opportunities but maintains a high bar for cultural alignment, financial attractiveness and strategic fit.
The company continued its collaboration with Goldman Sachs, launching two interval funds during the quarter and adding a sixth joint model portfolio. It also said it has an active pipeline of plan sponsors interested in its T. Rowe Price Goldman Sachs Retirement Blend Plus target-date sister series.
On artificial intelligence, President, Co-Head of Global Investments and CIO Eric Veiel said the company is deploying AI tools to improve research, synthesize information and create capacity for investment judgment. He said the firm is also reviewing middle- and back-office workflows, with potential efficiency impacts expected to develop over the next 12 to 24 months.
Sharps said the company views AI investment as a competitive necessity, while Veiel said T. Rowe Price’s proprietary research and trading information could help differentiate its use of the technology.
About T. Rowe Price Group (NASDAQ:TROW)
T. Rowe Price Group, Inc is a global investment management firm headquartered in Baltimore, Maryland. Founded in 1937 by Thomas Rowe Price Jr., the company provides investment strategies and advisory services to individual investors, retirement plans, financial intermediaries, institutions and other clients.
The company offers a range of actively managed and multi-asset investment products, including mutual funds, exchange-traded funds, separately managed accounts and other portfolio solutions.
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