Tags: Rowe | Price | top | TRW

T. Rowe Price: Tops in Money Management

Thursday, 12 Jan 2012 06:39 AM

By Dan Weil

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
There are about 20 money management firms in the U.S. with more assets than T. Rowe Price (TROW), but it’s a top performer in the field. The firm has registered a profit every quarter since it went public in 1986.

It has seen an outflow of investor cash only twice in the past five years. Unfortunately, the second instance showed up in the firm’s most recent earnings report, for the third quarter of 2011.

Investors withdrew $2.6 billion from T. Rowe Price in the quarter. As a result of that shift and $64.8 billion in market losses, the firm’s assets shrank to $454 billion.

Most of the redemptions came from institutional investors. When stock markets decline, as they did in the third quarter, T. Rowe Price suffers more than some others, because its funds are skewed more toward equities, the firm says. With the stock market having recovered from its early October lows, T. Rowe Price likely has seen an increase in assets.

One advantage the firm has is that nearly two-thirds of its assets are in retirement accounts and variable-annuity portfolios. Investors generally don’t pull their money out of those investments as frequently as with other account types.

That gives T. Rowe Price an advantage over its competitors, who aren’t as concentrated in the retirement and variable annuity areas.

Growth channels

Target-date retirement funds represent the fastest growing product for the firm. At the end of the second quarter, target-dated funds accounted for 13 percent of T. Rowe Price's asset total, according to Morningstar. The company also is expanding overseas, buying stakes in asset managers there.

T. Rowe Price’s profit rose 9.6 percent to $184.6 million in the third quarter from $168.4 million a year earlier. Revenue gained 16 percent to $679 million.

Standard & Poor’s analyst Royal Shepard has a hold rating on T. Rowe Price shares. “We think the strong relative performance of TROW's mutual funds will continue to drive asset growth,” he writes. “However, we expect only modest improvement in operating margins, given recent market trends favoring fixed income funds (only about 29 percent of TROW's total assets).”

The company next reports earnings on Jan. 27.

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Allen West Says Goodbye to Florida at Holiday Party

Saturday, 20 Dec 2014 08:49 AM

Tea party hero Allen West is making his final Florida appearance before moving to Texas. . . .

Rep. Mike Kelly Offers Obama 'Lump of Coal for Christmas'

Saturday, 20 Dec 2014 07:50 AM

All forms of energy in the United States should be developed to spur job creation and economic growth, Pennsylvania Repu . . .

Politico: Obama May Give Dems 80 Percent of 2016 Latino Vote

Friday, 19 Dec 2014 19:18 PM

President Barack Obama may be on track to helping deliver as much as 80 percent of Latino voters to the 2016 Democratic  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved