T. Rowe Price AUM Slides Nearly 25% in 2022

T. Rowe Price, which reduced its workforce as it sought to cut costs during rocky financial markets last year, saw assets under management decline by nearly 25% in 2022, the Baltimore investment firm said Thursday.

In reporting its fourth-quarter and full-year financial results for 2022, T. Rowe noted it ended the year with more than $1.27 trillion in assets under management, down 24.5% from nearly $1.69 trillion a year earlier.

During the fourth quarter, assets under management increased by $44.7 billion, driven by market appreciation and gains, partially offset by net cash outflows.

The firm reported net client outflows of $17.1 billion for the fourth quarter and $61.7 billion for the year.

Equities accounted for $14.3 billion in fourth-quarter net outflows, largely driven by the firm’s growth-oriented strategies, primarily U.S. large-cap growth. These outflows were partly offset by net inflows into structured research, all-cap, and dividend growth strategies, the firm said.

T. Rowe Price President and CEO Rob Sharps noted that stocks closed out their worst year since 2008 even though all developed equities markets and most in emerging markets saw gains in the fourth quarter. And despite a late rally in bond markets, he said, the Bloomberg U.S. Aggregate Bond Index experienced its worst year since its inception in 1976.

“Our assets under management declined 24.5% from the start of the year and our $5,969 million in 2022 investment advisory fees were 16% lower than 2021. To address this decline and to protect our capacity to invest in strategic initiatives, we focused on controlling expenses by cutting third-party spend, initially slowing the pace of hiring, and ultimately reducing our headcount by about 2%,” Sharps said.

“Our balance sheet remains strong and during the year we paid an annual dividend of $4.80 per share and bought back 6.8 million shares, reducing the weighted average shares outstanding as of December 31, 2022 to 224.3 million, the lowest year-end level since our IPO,” he said.

“While many of our growth equity strategies continue to experience lagging performance, we are seeing stronger relative performance in many of our core and value-oriented equity products and some of our fixed income products,” Sharps added. “The long-term performance of our flagship retirement products remains strong. We remain confident that we will be able to deliver strong investment performance for our clients in the future.”

The firm remains committed to managing expenses while thoughtfully investing in its strategic growth initiatives, he said.

T. Rowe Price’s net income for 2022 declined 49.5% to $1.55 billion from $3.08 billion.

(Image: Bloomberg)