Inve US ▾
TRTROW

Price T Rowe Group (TROW) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 30, 2026

Source: earnings call transcript

Executive summary

T. Rowe Price Q1 FY26 — ETF and Alternatives Growth Amidst Equity Outflows

T. Rowe Price navigated a volatile market, demonstrating resilience in its ETF, SMA, and alternative credit offerings, notably OHA, which saw significant AUM growth and fundraising. Despite continued outflows in equity and mutual fund segments, the firm is strategically investing in solutions-oriented products and lower-fee vehicles, aiming for long-term growth and efficiency. Management is focused on leveraging its strong balance sheet for strategic investments and capital returns.

Highlights

5

  • Adjusted EPS increased 13% year-over-year to $2.52.

  • ETF net flows exceeded $2.8 billion in Q1, with AUM surpassing $25 billion.

  • OHA's AUM grew meaningfully to $112 billion, including a $17.7 billion fundraise for OLED.

  • Target Date franchise delivered $4.9 billion in net inflows.

  • SMA platform expanded to 42 offerings with over $900 million in net flows.

Concerns

4

  • Experienced $13.7 billion in net outflows for the quarter.

  • Equity and mutual fund businesses continued to face outflows.

  • 1-year performance for funds remained challenged, with only 8% of Target Date AUM outperforming peers.

  • Annualized effective fee rate declined to 38.4 basis points due to mix shift.

Guidance & targets

CategoryTargetConfidence
Adjusted Operating Expenses (excluding carried interest)
up 3% to 6% over 2025
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Multi-asset
Net flows: positive
————
Fixed income
Net flows: positive
————
Alternatives
Net flows: positive
————
Equities
Particularly U.S. growth-oriented strategies remained in outflows.
Net flows: negative
————
Target Date franchise
Driven by sustained momentum in blend products.
Net inflows: $4.9 billion
————
International bond
Net flows: strong
————
U.S. equity research
Net flows: strong
————
ETF
Net inflows: $2.8 billion
————
SMA
Net inflows: $962 million
————

TROW operating KPIs by quarter

TROW operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Net new assets ETF
$2.8B+ Our ETFs generated over $2.8 billion in net flows in the first quarter. Source: earnings call transcript
$4.4B Within our growing ETF business, we had $4.4 billion in net inflows. Source: earnings call transcript
—
Assets under management (AUM) SMA
$17B+ Our SMA platform expanded to 42 offerings with more than $17 billion in AUM and over $900 million in net flows in the [indiscernible] quarter. Source: earnings call transcript
$20B Our SMA platform now includes 43 products and $20 billion in assets under management. Source: earnings call transcript
—
Net new assets
-$13.7B As previously reported, we ended the quarter with $1.71 trillion in AUM, and $13.7 billion in net outflows. Source: earnings call transcript
-$6.5B We ended the quarter with $1.9 trillion in assets under management and $6.5 billion in Q2 net outflows. Source: earnings call transcript
+52.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Interval Fund and Target Date Sister Seriesroadmap
2 new ETFslaunch
First ETFs in Europeroadmap
First T. Rowe Price managed CLOlaunch
OFlex multi-strategy credit interval fundlaunch

Deals & partnerships

Goldman Sachs Collaboration on model portfolios and product development (interval fund, Target Date sister series).

Our collaboration with Goldman Sachs is progressing with momentum building in model portfolios and product development advancing for the launch of an interval fund and Target Date sister series later this year.

First Abu Dhabi Bank Advancing partnership from planning into execution for targeted mid-2026 launch.

We advanced our partnership with First Abu Dhabi Bank from planning into execution, with preparations underway across marketing, training and client support for a targeted mid 2026 launch.

Aspida Manage public and private assets for Aspida, a life insurance and annuity platform. over $0.5 billion

We are making progress in our partnership with [ Aspida ] for which we manage both public and private assets totaling over $0.5 billion at the end of March. Our experience with Aspida is informing our approach to the substantial opportunity in insurance more broadly.

OHA Formalized a new operating arrangement, deepening collaboration.

We also formalized a new operating arrangement with OHA, and are excited about our ongoing collaboration and the capabilities their team brings to the overall T. Rowe Price business.

Risks & headwinds

Continued outflows in equity and mutual fund businesses. Q1 FY26

$13.7 billion in net outflows for the quarter.

Mitigation:Teams are making progress in stabilizing flows and are advancing innovative strategies, new vehicles and compelling solutions.

Challenged 1-year performance across funds, particularly equity and Target Date. 1-year period

21% of equity fund assets outperforming for 1 year; 8% of Target Date AUM outperforming for 1 year.

Mitigation:Focus on active management approach rooted in strong fundamental research and long-term focus; recent quarter had strong performance for Target Date (86% AUM outperforming).

Decline in effective fee rate. Q1 FY26

Q1 annualized effective fee rate, excluding performance-based fees of 38.4 basis points is down from Q4, 2025.

Mitigation:Ongoing trends align with current demand for and investment in solutions-oriented products and lower fee vehicles.

Market volatility and geopolitical risks (e.g., Iran conflict, energy prices, AI advancements). Q1 FY26

Markets declined in March in response to the conflict with Iran, which pushed energy prices sharply higher.

Mitigation:Active management approach positions to take advantage of opportunities; market fundamentals generally remain positive; economy has shown resilience.

Concerns about AI disruption risk among incumbent software providers. Q1 FY26

EM stock, which went down $80 in a 6-week period because of an [indiscernible] threat to its [ cobalt ] business.

Mitigation:OHA has avoided ARR loans and technology risk, focusing on mission-critical software; rigorous underwriting process and continuous re-underwriting.

Elevated redemption activity and requests for liquidity across non-traded BDCs in the industry. Q1 FY26

Many vehicles receiving requests in excess of the 5% quarterly limit.

Mitigation:Retail products only represent ~20% of broader corporate private credit market; liquidity mechanics exist to prevent asset-liability mismatch; OHA's OCREDIT had redemptions well below 5% limit and positive net flows.

What to watch in Q2 FY26

ETF AUM growth

next quarter
Current over $25 billion
Target Continued growth and progress towards European launch

Why it matters

ETF growth is a top strategic priority and a key driver of new client acquisition and AUM diversification.

As of last week, our ETF assets under management surpassed $25 billion. We are also developing plans to launch our first ETFs in Europe.

Find out whether TROW delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked about deployment opportunities given wider spreads and less competition, and OHA's exposure to software and AI disruption.

Glenn August noted spread widening of 25-50 bps on new deals and that the market is waiting for more deal activity. He stated OHA has avoided ARR loans and technology risk in software credit, focusing on mission-critical software with a 40-year track record.

“The market clearly has widened in spread based on kind of classic supply-demand dynamics with demand a little lower were meaningfully lower in the wealth channel, the spread widening on new deals is probably in the neighborhood of 25 to 50 basis points, and it could widen out.”

asked by Dan Fannon · answered by Unknown Executive

2 min read 6 chapters

Detailed narrative

Market Dynamics and Active Management

Markets experienced volatility in Q1 due0 to geopolitical events and energy price spikes, followed by a rebound. Management emphasized that this environment, characterized by broadening markets and returns beyond hyperscalers, plays to T. Rowe Price's strengths in active management and fundamental research, particularly in cyclical areas and AI infrastructure-related sectors. The firm noted a pick-up in interest for non-U.S. assets.

Investment Performance

While long-term asset-weighted performance remained strong (71% over 3 years, 78% over 10 years), the 1-year period was challenged, with only 21% of equity fund assets outperforming. Fixed income funds delivered strong performance across all timeframes, and the Target Date franchise showed robust long-term outperformance, despite a weak 1-year period, with 86% of AUM outperforming peers in the most recent quarter.

Strategic Growth Initiatives

T. Rowe Price is advancing several initiatives, including collaboration with Goldman Sachs on model portfolios and new product development for an interval fund and Target Date sister series. The firm is also developing plans to launch its first ETFs in Europe and expanding its SMA platform, which now offers 42 solutions. These efforts aim to deliver outcome-oriented solutions and expand distribution relationships.

OHA's Alternative Credit Business

OHA, T. Rowe Price's alternative credit manager, reported significant growth, with AUM reaching $112 billion, up from $88 billion at year-end 2024. The firm successfully closed its largest fundraise, OLED, at $17.7 billion. OHA is seeing strong institutional demand for alternative credit, viewing current market challenges as an opportunity for differentiation and deployment of over $30 billion in dry powder, positioning it well for the current market environment.

Wealth and Insurance Channel Expansion

OHA is growing its presence in the wealth channel with products like OCREDIT, a perpetual non-traded BDC with $3 billion in investments, and the newly registered OFlex multi-strategy credit interval fund. The partnership with Aspida for managing over $0.5 billion in public and private assets is informing a broader approach to the insurance market, which is seen as a significant growth opportunity for OHA's private credit, CLOs, and asset-backed strategies.

Capital Management and Efficiency

The company maintains a strong balance sheet with over $4.1 billion in cash and discretionary investments. It continues to prioritize returning capital to stockholders, highlighted by its 40th consecutive annual dividend increase and increased stock buybacks of $340 million in Q1. Ongoing expense management programs contributed to a 7% QoQ decrease in adjusted operating expenses, with a focus on driving efficiency while investing in strategic priorities for long-term growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.