T. Rowe Price Profit Rises as Market Rally Lifts Assets

T. Rowe Price Group Inc. (TROW), the asset manager that has posted a profit every quarter since going public in 1986, said second-quarter earnings rose 20 percent as equity market gains lifted the value of assets and the fees they generate.

Net income increased to $245.8 million, or 92 cents a share, from $205.6 million, or 79 cents, a year earlier, the Baltimore-based company said today in a statement. Earnings missed the 96-cent average estimate of 13 analysts in a Bloomberg survey.

“Their assets under management are likely going to be meaningfully higher than a year ago despite what we think will be outflows from the firm’s mutual funds in the second quarter,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview before results were announced.

Clients withdrew a net $8 billion from the firm in the second quarter, as a few large customers changed their investment allocations. T. Rowe Price has about 75 percent of client assets invested in stocks, boosting revenue when equity markets rally. The Standard & Poor’s 500 Index rose 18 percent in the 12 months ended June 28, and the MSCI All Country World Index rose 14 percent.

BlackRock Inc. (BLK), the world’s largest asset manager, said July 18 its second-quarter net income rose 32 percent as investors deposited a net $11.0 billion in BlackRock funds, driven by multi-asset products and index funds.

T. Rowe Price’s results were announced before the start of regular U.S. trading. The shares rose 22 percent this year through yesterday, compared with a 31 percent gain for the Standard & Poor’s 20-company index of asset managers and custody banks.

After pouring $67 billion in U.S.-registered equity mutual funds in the first quarter, investors added about $10 billion in the second quarter, according to the Investment Company Institute.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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