T. Rowe Price Group Inc
(FRA:TR1)
€
98.26
-0.69 (-0.7%)
Market Cap: 21.11 Bil
Enterprise Value: 19.69 Bil
PE Ratio: 11.44
PB Ratio: 2.21
GF Score: 81/100 
Q2 2026 T Rowe Price Group Inc Earnings Call Transcript
Jul 31, 2026 / 12:00PM GMT
Release Date Price:
€96.94
(-6.41%)
Key Points
Positve
- T. Rowe Price Group Inc (TROW) reported adjusted EPS of $2.57 for Q2 2026, up from $2.52 in Q1 2026 and $2.24 in Q2 2025, driven by higher average AUM and investment advisory revenue.
- The company saw positive net flows in May and June, including a large sub-advisory win, and positive flows from clients in both EMEA and APAC during the quarter.
- Fixed income, multi-asset, and alternatives each delivered positive net flows in Q2, demonstrating breadth of client demand across several business areas.
- The ETF business grew to 34 funds and $30 billion in AUM, with $4.4 billion in net inflows during the quarter, and the SMA platform expanded to 43 products and $20 billion in AUM.
- The strategic alliance with Goldman Sachs is advancing, with the launch of the first interval fund, a second fund in registration, and positive client feedback on the target date sister series.
- The company is making meaningful progress in AI, with more than 130 AI solutions deployed and over 70% associate adoption, enhancing decision-making speed and consistency.
- Long-term investment performance remains strong, with 79% of funds outperforming on an asset-weighted basis over the 10-year period, and fixed income funds showing over 75% outperformance for all reported time periods.
- The company repurchased $157 million worth of shares in Q2, bringing year-to-date buybacks to over $497 million, or nearly 2.5% of outstanding shares.
- The balance sheet remains strong with $4.4 billion of cash and discretionary investments, providing ample capacity for investment and potential inorganic opportunities.
- The company expects 2026 to be a record year for gross flows, reflecting strong interest in a broad range of investment strategies, including lower tracking error offerings and integrated equity strategies.
Negative
- T. Rowe Price Group Inc (TROW) experienced $6.5 billion in net outflows in Q2 2026, with elevated outflows in April, and expects net flows in the second half of the year to be meaningfully more challenging than the first half.
- Fundamental active equity remains under pressure, with ongoing outflows expected to continue in the second half of the year, particularly in open-ended mutual funds and a handful of growth strategies.
- The annualized effective fee rate declined to 38.1 basis points from 38.4 basis points in Q1 2026, reflecting ongoing pressure from client demand for lower fee strategies and vehicles.
- Adjusted operating expenses increased 4.2% from Q1 2026 and 4.9% from Q2 2025, driven by higher market-driven expenses, product and record-keeping costs, and non-recurring G&A costs.
- The five-year investment performance was challenged, with only 44% of funds beating their peer groups on an asset-weighted basis, and equity funds' nearer-term performance is under pressure.
- OHA's distressed and opportunistic funds mostly generated losses in Q2 and had mixed first-half results, while liquid credit funds underperformed their benchmarks due to high-conviction positions experiencing increased volatility.
- The 2026 Russell reconstitution caused significant reshaping of benchmark risk characteristics, with substantial migration of AI-related exposures and technology leadership, adding volatility to the broader market.
- The company expects an 'air pocket' in the late-stage target date pipeline, suggesting a lull in RDF flows in the second half of the year.
- The SMA business, at $20 billion in AUM, remains comparatively small relative to peers, and the company acknowledges it was a latecomer to this business.
- The expense guidance for full-year 2026 was raised to 4% to 7% growth over 2025's $4.6 billion, reflecting sustained average AUM and revenue trends, which may pressure margins.
Operator
Good morning. My name is Howard, and I will be your conference facilitator today. Welcome to T. Rowe Price's second-quarter 2026 earnings conference call. (Operator Instructions) As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website short after the call concludes.
I will now turn the call over to Linsley Carruth, T. Rowe Price's Director of Investor Relations.
Linsley Carruth
Director of Investor Relations - Director of Investor Relations
Hello, and thank you for joining us today for our second quarter earnings call. The press release and the supplemental materials and documents can be found on our IR website at investors.troweprice.com. Today's call will last approximately 45 minutes.
We'll start the call with our Chair and CEO, Rob Sharps; CFO, Jen Dardis; and President, Co-Head of Global Investments, and CIO, Eric Veiel discussing the company's results. Then we'll open it up to your questions. We ask that you limit it to one question per participant.
I'd like to remind you that
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