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.

By Charley Blaine Oct 22, 2010 12:14PM
Asset manager T. Rowe Price Group (TROW) went public in 1986 and has been a money maker ever since.

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).
Some of the gain was luck. The stock market had its 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. T. Rowe Price

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.BlackRock

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.Janus Capital Group

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.
1Comment
Oct 25, 2010 8:58AM
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What a sorry state we are in if we can't manage to keep products here, like wheat, please people have you seen our great farmlands? We shouldn't be importing much of anything food related for staples like cereal. Sometimes I think that all the "experts" need a good thump on he back of the head.
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