T Rowe Price Sees 11% Profit Boost Amid Market Rally

Asset manager T Rowe Price reported an 11% increase in second-quarter profit, driven by a market rally that improved the value of client investments. Despite experiencing $3.7 billion in outflows, the firm's assets under management grew 12% to $1.57 trillion. Analysts suggest high interest rates might help active managers regain market share.

Asset manager T Rowe Price reported an 11% increase in second-quarter adjusted profit on Friday, driven by a relentless market rally that has boosted the value of clients' investments and mitigated outflow impacts. The firm, known for actively managed funds, has seen 13 consecutive quarters of outflows.

The current market rally helped T Rowe's assets under management (AUM) withstand the adverse effects. At the end of the quarter, the company's AUM, which determines its fees, grew 12% to $1.57 trillion despite $3.7 billion of net outflows. CEO Rob Sharps mentioned continued progress in reducing net outflows this year, following $8 billion in outflows in the first quarter.

Some analysts believe the current high interest rate environment could help active managers stage a comeback after years of competing with passive funds. According to them, investors will need to adopt a more hands-on strategy to add value and manage risk, contrasting with the passive approach that has dominated asset management over the last decade.

T Rowe's investment advisory fees, usually a percentage of AUM, increased by 11% to $1.59 billion. Adjusted profit for the three months ending June 30 rose to $519.7 million, or $2.26 per share, compared with $466.5 million, or $2.02 per share, a year ago.

(With inputs from agencies.)