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    TROW
    Earnings call· Mar 2026(Q1 FY26)

    PRICE T ROWE GROUP Q1 FY26 earnings call TROW

    Apr 30, 2026 Source

    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

    1
    CategoryTargetConfidence
    Adjusted Operating Expenses (excluding carried interest)
    up 3% to 6% over 2025
    high materiality
    High

    Segment performance

    9
    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
    		————

    Operational metrics

    31
    Adjusted EPS
    $2.52up 13% YoY, up 3% QoQ
    Q1 FY26
    AUM (period end)
    $1.71 trillion
    Q1 FY26
    AUM (average)
    $1.78 trillionnearly flat QoQ, up 9.6% YoY
    Q1 FY26
    Net Outflows
    $13.7 billion
    Q1 FY26
    Adjusted Net Revenue
    $1.8 billionup 5% YoY, down 3.2% QoQ
    Q1 FY26
    Investment Advisory Revenue
    $1.7 billionup 5.3% YoY, down 3.2% QoQ
    Q1 FY26
    Annualized Effective Fee Rate (ex-performance fees)
    38.4down QoQ
    Q1 FY26

    Decrease primarily reflects growth of Target Date franchise and outflows from higher fee equity strategies, as well as growth of trust and separate accounts coupled with mutual fund outflows.

    Adjusted Operating Expenses (ex-carried interest)
    $1.14 billionup 1% YoY, down 7% QoQ
    Q1 FY26

    QoQ decrease due to seasonal factors and cost savings from expense management program.

    Cash and Discretionary Investments
    $4.1 billion
    Q1 FY26
    Quarterly Dividend
    $1.3040th consecutive annual increase
    Q1 FY26
    Stock Buybacks
    $340 million
    Q1 FY26

    Purchased largely toward the end of the quarter during periods of market dislocation.

    Common Shares Outstanding
    214.9 million
    Q1 FY26
    Stock Buybacks (YTD)
    4 millionjust under $400 million
    YTD FY26

    Higher pace than recent history, reflecting value seen in share price.

    OHA Total AUM
    $112 billionup from $88 billion at year-end 2024
    Q1 FY26

    Includes committed capital and leverage.

    OHA North America Capital
    60%
    Q1 FY26

    Largest market for OHA.

    OHA OLED Fundraise
    $17.7 billion
    Q4 FY25

    Largest single fundraise in OHA's history for senior direct lending.

    OHA Capital Raised (2024-2025)
    $40 billion
    2024-2025

    Includes leverage, contributed to 2 consecutive years of record fundraising.

    OHA Dry Powder
    $30 billion
    Q1 FY26

    Across various strategies, positions OHA to deploy capital opportunistically.

    OHA OCREDIT Investments
    $3 billion
    Q1 FY26

    Investments at fair value.

    OHA OCREDIT Redemptions
    well below 5%
    Q1 FY26

    Redemptions were below the industry's typical 5% quarterly limit.

    OHA Portfolio Companies EBITDA
    $300 million to $350 million
    Q1 FY26

    Average EBITDA of companies in OHA's portfolio, focusing on large-cap mission-critical players.

    OHA Portfolio Companies Loan to Value
    35-40%
    Q1 FY26

    Senior positions in portfolio companies.

    OHA CLO Business Default Rate
    30market average 2.25%
    over 25 years

    Reflects rigorous underwriting process.

    Aspida Assets Managed
    $0.5 billion
    Q1 FY26

    Public and private assets managed for Aspida.

    ETF AUM
    $25 billion
    Q1 FY26
    ETFs with >$1B AUM
    8
    Q1 FY26
    SMA Offerings
    42
    Q1 FY26
    SMA AUM
    $17 billion
    Q1 FY26
    Software Credit Allocation (OHA)
    15% to 20%in line with market
    Q1 FY26

    OHA's allocation to software credit.

    Credit Spread Widening (OHA)
    25 to 50
    Q1 FY26

    Spread widening on new deals in the private credit market.

    High-Yield Market BB-rated
    55%
    Q1 FY26

    Over 55% of the high-yield market is BB today, indicating better credit quality.

    Product announcements

    5
    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

    4
    Goldman SachsCollaboration 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 BankAdvancing 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.

    AspidaManage 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.

    OHAFormalized 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

    6
    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

    5

    ETF AUM growth

    next quarter
    Currentover $25 billion
    TargetContinued 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.