Retirement assets boost T. Rowe Price
Earnings are strong as investors pour nearly $3 billion into target-date funds. A good stock market helps, too.
The tradition continued with today's third quarter results. The company reported a 27% increase in third-quarter earnings, and shares were up 4.3% to $54.91. The gain was sixth among stocks in the Standard & Poor's 500 Index ($INX).
best September since 1939, and the S&P 500 jumped 8.8%.
But T. Rowe Price also benefited from growth in its retirement-related funds. Investors poured a net $2.3 billion into the company's target-date retirement funds during the quarter. Net deposits were $8 billion, helping increase assets under management by 12% from a year earlier to $439.7 billion.
"They are a machine. They are more conservative and more disciplined" than other asset managers, Greggory Warren, an equity analyst at Morningstar, told Bloomberg News.
Net income increased to $168.4 million, or 64 cents a share, from $132.4 million, or 50 cents, a year earlier, the company said. Analysts had expected 60 cents a share.
The company has $53.5 billion, or 12% of its assets, in target-date funds, whose holdings become more conservative as investors near retirement age.
Investors continued to favor bonds over stocks as they poured a net $1.1 billion into T. Rowe mutual funds. Clients deposited $1.8 billion into fixed-income funds while withdrawing $600 million from stock and blended-asset funds, and $100 million from money market funds.
Outside mutual funds, investors deposited $5.9 billion, mainly from institutional clients.
Market appreciation boosted assets by $40.6 billion. Revenue rose 17.6% to $586.1 million. Investment advisory fees jumped 20% to $502.5 million, reflecting the higher assets.
T. Rowe Price shares, however, have been hit by this year's market volatility.
If today's gains hold, the shares will be up about 3% for 2010. That's how much they gained in the first quarter. They tumbled 19.3% in the second quarter, then rebounded by 13.9% in the third quarter. They're up 9.8% this month alone.
Money managers appear to be having a great third quarter. BlackRock (BLK), which is the world's largest money manager, said Tuesday that its third-quarter net income rose 74% to $551 million, or $2.83 a share.
Reason: Its acquisition of Barclays Global Investors more than doubled the assets it oversees. BlackRock shares were up 0.9% to $167.74 today. The shares are off slightly so far in October.
Higher assets helped increase Janus Capital Group's (JNS) net income to $32.5 million even as investors withdrew $2.9 billion in the third quarter, the company said yesterday.
Shares were down 0.3% to $10.82 and are off 1.1% in October.
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[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.
The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More
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