T. Rowe Price Group, Inc.

TROW · NASDAQ · USD

Whether growth in fixed income, blend retirement, ETF and alternative credit flows can replace the fee revenue lost as active equity mutual funds keep shrinking.

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Fixed income and retirement blends

    The bull case is that demand is moving toward fixed income, blend retirement strategies and alternatives, the parts of the franchise already attracting money.

  • Active ETF and SMA distribution

    The firm is rebuilding distribution through active ETFs, separately managed accounts and model portfolios, which reach wealth advisers who rarely buy open-end funds.

  • Alternative credit and partnerships

    The Goldman Sachs collaboration and OHA's private credit platform add fee streams and capabilities that the long-only equity business cannot provide.

  • Buybacks and cost control

    Buybacks shrink the share count while management holds controllable cost growth in the low single digits, so per-share earnings hold up as the revenue mix shifts.

Bear case

  • Active equity redemptions

    The bear case is that the largest block of assets, active equity mutual funds, keeps losing clients to passive and to cheaper vehicles, and flows have not improved.

  • Falling fees per dollar

    Because ETFs, trusts and model delivery charge less than the mutual funds they replace, revenue trails asset growth and the fee rate keeps sliding.

  • Cost growth and flow outlook

    Higher expense growth and a tougher flow outlook mean earnings now depend on market returns doing the work that cost programs were meant to do.

Bull and bear points

Growth & Execution

In short: Fixed income, retirement blend and ETF flows are growing, while active equity redemptions outweigh them.

Bull · 2

  • Fixed income has posted eight consecutive quarters of net inflows

    Steady demand for bond strategies gives the firm a growing revenue base that does not depend on a recovery in equity fund flows.

    Q4 FY2025 call

  • ETF lineup reaches 34 funds and $30 billion in assets

    ETFs and separate accounts reach wealth advisers who no longer buy open-end funds, making them the main channel for replacing lost mutual fund assets.

    Q2 FY2026 call
Bear · 2

  • Management now expects a harder second half for flows

    A quarter ago the base case was continued equity pressure partly offset by other inflows; management now says second-half net flows will be meaningfully more challenging than the first half.

    Tone shiftQ4 FY2025 → Q2 FY2026

  • Target date pipeline has an air pocket in the second half

    Target date funds have been the firm's most reliable source of net inflows, so a pause in new plan wins leaves equity redemptions with less to offset them.

    Q2 FY2026 call

Profitability & Financial Strength

In short: Buybacks and rising markets lift revenue, while a falling fee rate and higher expenses pressure margins.

Bull · 2

  • Asset management revenue rose 11.3% in the latest quarter

    Market appreciation lifted assets and fees even though clients withdrew money, which shows how much of the earnings base depends on market levels rather than flows.

    Filed financials

  • Buybacks cut the diluted share count about 3% over three years

    Repurchases of $497 million in the first half of 2026 cut the share count, so per-share earnings grow faster than total profit.

    Q2 FY2026 call
Bear · 2

  • Effective fee rate keeps falling as clients move to cheaper vehicles

    The annualized fee rate slipped to 38.1 basis points from 38.4 in the prior quarter, so each dollar of assets produces less revenue than before.

    Q2 FY2026 call

  • Expense guidance raised to 4% to 7% growth for 2026

    Cost growth is now expected to outpace the earlier range, driven by market-linked compensation and record-keeping costs, so savings cover less of the fee-rate decline.

    Tone shiftQ4 FY2025 → Q2 FY2026

Market Position

In short: Retirement and fixed income are strong franchises, while passive pricing and regulation limit fee growth.

Bull · 3

  • Target date one-year performance rebounded sharply

    A quarter ago management said one-year target date performance remained challenged; it now reports a rebound, with most assets ahead of peers, which supports keeping plan mandates.

    Tone shiftQ1 FY2026 → Q2 FY2026

  • Blend target date strategies are gaining share in the fastest-growing category

    Fully active target date funds are losing ground to passive and blend, so winning blend mandates keeps retirement assets that would otherwise leave.

    Q4 FY2025 call

  • Operating margin held through the worst revenue decline

    Revenue fell 19.9% from FY2000 to FY2002 while the operating margin slipped only from 35.4% to 34.7%, which shows the cost base flexes with markets.

    Filed financials
Bear · 1

  • Fiduciary rules slow private alternatives in retirement plans

    Plan sponsors cite ERISA fiduciary risk and are waiting on Department of Labor guidance, so the private-market retirement products the firm built may scale slowly.

    Q4 FY2025 call