T. Rowe Price’s assets under management and revenues were down in the first quarter of 2022, following trends in the stock market, which faced its worst quarter since the onset of the pandemic.
The Baltimore-based asset management firm ended the quarter with $1.55 trillion in assets under management, an increase from $1.52 trillion this time last year but a decrease from $1.69 trillion at the end of last quarter. Its net revenues of $1.86 billion represent a 2.0% year-over-year increase, but a decrease from $1.96 billion last quarter.
CEO and President Rob Sharps said that these drops could be attributed in large part to market volatility. Q1 of 2022 was the worst quarter for stocks since the start of the pandemic in early 2020 in part due to Russia’s invasion of Ukraine, high inflation rates and the Federal Reserve recently raising its benchmark short-term interest rate. The S&P 500 declined 4.9% this quarter, the Dow Jones Industrial Average declined 4.6% and the Nasdaq Composite declined 8.9%.
Certain sectors on which T. Rowe’s equity strategies are focused, such as technology, were hit especially hard by current downturns in the market, leading the firm to get hit harder than some of its peers.
T. Rowe did see success with three of its asset classes — multi-asset, fixed income and alternative products, which brought in inflows of $6.7 billion, $5.3 billion and $0.8 billion, respectively.
Still, the success of those classes wasn’t enough to offset outflows of $18.1 billion in the firm’s equity strategies. The firm has experienced outflows from its U.S. equity products for several years, leading to a long-term focus on growing its multi-asset, fixed income and alternative product options. The firm’s acquisition of Oak Hill Advisors, L.P., an alternative credit management company, at the end of last year was part of that growth strategy.
“We’re always interested in measured growth in our business,” Sharps said.
The firm’s adjusted non-GAAP diluted earnings per common share, $2.62, also lagged the Zacks Consensus Estimate of $2.75.
It has been a challenging time to begin helming the company, said Sharps, who took on the position of CEO and president at the beginning of 2022 following the retirement of Bill Stromberg.
“Not only do you have the pressures that (I) talked about earlier in the market, but you also have a really tight labor market and a really intense bid for talent in areas like technology,” he said.
Still, Sharps is pleased that many associated have been able to return to the office on a flexible schedule following the end of the omicron surge earlier this year. He is also encouraged by the firm’s success in other areas outside of revenue and assets.
“Despite the fact that it is a challenging market, we continue to generate a lot of cash flow and we continue to have a very strong balance sheet,” he said. “We are a strong company … it is a challenging market, but we certainly have the wherewithal to continue investing in our business.”