T. Rowe Price Posts $28.3 Billion of Third-Quarter Outflows as Adjusted EPS Edges Up to $2.86

T. Rowe Price reported net client outflows of $28.3 billion in the third quarter on Thursday as investors pulled money from its equity and multi-asset strategies, even as higher average assets lifted revenue and adjusted earnings, according to its earnings release filed with an 8-K.

The Baltimore-based asset manager's adjusted diluted EPS rose 1.8% to $2.86 from $2.81 a year earlier. GAAP diluted EPS fell 2.8% to $2.79 from $2.87, and net income declined 5.2% to $612.3 million.

Revenue climbs on higher average assets

Net revenue increased 5.9% to $2.00 billion. Investment advisory fees rose 5.8% to $1.80 billion as average assets under management grew 9.5% to $1.887 trillion.

The fee rate kept slipping, though. The annualized effective fee rate, excluding performance-based fees, fell to 37.8 basis points from 39.1 a year earlier and 38.1 in the second quarter. The company said client flows and transfers drove a mix shift toward lower-fee products and asset classes, partly offset by equity market gains.

Capital allocation-based income, which reflects changes in accrued carried interest, rose to $59.9 million from $42.0 million, driven mainly by the firm's recently launched late-stage venture fund.

Where the money went

Ending assets under management fell $30.7 billion during the quarter to $1.86 trillion. Equity strategies saw net outflows of $25.6 billion and multi-asset strategies lost $7.6 billion. Fixed income, including money market, took in $3.4 billion, and alternatives had net inflows of $1.5 billion.

"We continue to expand our ETF, SMA, and model portfolio businesses, extending our active investment expertise to more clients through a broader range of portfolio solutions," Chair and CEO Rob Sharps said in the release. He cited product launches, improving investment performance and progress on strategic partnerships.

Costs and the GAAP gap

GAAP operating expenses fell 1.2% to $1.24 billion, and GAAP net operating income jumped 19.7% to $769.8 million. Adjusted operating expenses rose 5.8% to $1.20 billion, and adjusted net operating income increased 4.5% to $809.2 million.

The GAAP profit decline came below the operating line. Non-operating income dropped to $17.6 million from $238.4 million a year earlier. On an adjusted basis, the company said lower investment gains were driven mainly by losses on fixed income holdings from rising interest rates, which more than offset higher dividends on cash equivalents.

The firm had 7,640 employees at Sept. 30, down 2.4% from a year earlier. Common shares outstanding fell to 213.3 million from 218.6 million at the end of 2025.

Tax outlook

T. Rowe Price estimates its full-year 2026 effective tax rate will be 23.5% to 25.5% on both a GAAP and adjusted basis.

By the numbers

• $28.3 billion: third-quarter net client outflows
• $1.86 trillion: ending assets under management
• $2.86: adjusted diluted EPS, up 1.8%
• $2.79: GAAP diluted EPS, down 2.8%
• $2.00 billion: net revenue, up 5.9%
• 37.8 basis points: effective fee rate, excluding performance fees

Sources

1. T. Rowe Price Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 29, 2026 (accession 0001113169-26-000003)

This article is for informational and educational purposes only and is not investment advice. It is not a recommendation to buy or sell any security.

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