Oct 29, 2026 earnings call — Growth push in ETFs, SMAs and model portfolios
T. Rowe Price reported $1.86 trillion AUM and $28.3 billion net outflows this quarter.
Revenue $2.0B (est $2.0B) · EPS $2.86 (est $2.63)
Key quotes
"Over 50% of our fund assets beat their peer groups on the 1-, 3- and 10-year time periods."
"We're also advancing our use of AI through our strategic relationship with Anthropic."
Analyst Q&A 9
Institutional allocation trends
Q (Glenn Schorr · Evercore): How will institutional (LP) allocations shift into 2027 given active-to-passive, AI spending, and higher rates?
A: Management said each institutional client is different, so it is hard to state one overall theme. They see the long-term shift from active equity to index-based portfolios continuing, more interest in value strategies, fixed income and inflation-hedge exposure, and rising demand in some alternatives like infrastructure, secondaries, private credit and late-stage venture.
"At a high level, as you said, the shift from actively managed equity portfolios to index-based portfolios is something that's been underway across client type for some period of time." — Robert Sharps (CEO·CHAIR)
Organic growth from new initiatives
Q (Alexander Blostein · Goldman Sachs): How much will new wrappers, partnerships, and initiatives add to T. Rowe's organic growth over the next 2–3 years?
A: Management said the firm is navigating structural change and expects pressure on active equities and mutual funds to persist. They are investing across ETFs, SMAs, models, fixed income, alternatives, distribution and retirement to compete and grow, and will use M&A selectively as a tool where it makes sense.
"I think we fully recognize these trends, and we're investing to compete successfully as the industry evolves." — Robert Sharps (CEO·CHAIR)
Q4 flows and plan pipeline
Q (Daniel Fannon · Jefferies): Is the expected sequential improvement in flows just the absence of a big Q3 redemption or are gross sales improving? How does the DC plan pipeline look for Q4?
A: Management expects sequential improvement in Q4 versus Q3 and versus Q4 '25, though flows will remain pressured by active equity trends. October was weak, but the pipeline shows better results in November and December; year-end plan activity can slip into early next year, and Target Date growth will depend more on winning new plans as participant contributions weaken.
"We do expect sequential improvement in Q4 relative to Q3 and relative to Q4 '25." — Robert Sharps (CEO·CHAIR)
Growing active ETF business
Q (Y. Cho · JPMorgan): What is the distribution roadmap to move T. Rowe from the 13th largest active ETF manager toward the top 5?
A: Management said their 39 ETFs cover 72% of the Morningstar category and they will continue to add funds where clients need them. They have momentum with several large ETFs and strong net flows; they are focused on meeting client needs rather than a leaderboard target, but expect to gain share as they scale the lineup and get more placement on platforms and models.
"So we feel really good about our lineup, but we will continue to add to our lineup, particularly where we see opportunities to meet client needs." — Dorothy Sawyer
Own models vs third-party models
Q (Alexander Bond · KBW): How do you view opportunities between T. Rowe-designed asset-allocation models and fitting T. Rowe ETFs into third-party models? Where is traction and how will you allocate distribution investment?
A: Management said they deliver models in multiple ways and see traction in proprietary models for retail direct and intermediaries. They are investing in growth of home office models where T. Rowe is a building block, and they see especially strong demand for customized adviser models; they are expanding intermediary distribution with an additional 50 associates.
"But the last one that I think is most compelling and exciting where we see incredible demand from advisers is around customized models." — Dorothy Sawyer
Share buybacks and capital priorities
Q (Benjamin Budish · Barclays): Why were there no buybacks this quarter and has the company's buyback posture changed?
A: Management said capital priorities are unchanged: maintain financial strength, invest in the business, have seed capital, support the dividend, and return excess capital over time. They noted cash and discretionary investments sit at just about $4.9 billion this quarter, they bought about 5.3 million shares for just under $500 million in the first half and paused in Q3, and repurchases will remain opportunistic while they also fund seeding and new strategies.
"So if you look at where we are this quarter, it's sitting at just about $4.9 billion in cash and discretionary investments." — Jen Dardis (CFO)
AI workflows and business impact
Q (Michael Cyprys · Morgan Stanley): Where are AI-enabled workflows today, what steps will you take over 12–24 months, and how will AI affect revenue and costs?
A: Management said they have invested heavily in AI and are focused on two areas: embedding tools in the investment process to help research and judgment, and rethinking middle and back office workflows from the ground up. They expect to see impacts on investment outcomes and on efficiency over the next 12–24 months, and noted proprietary data will be a key differentiator.
"We've invested heavily in our AI capabilities, and I would focus on sort of 2 main areas." — Eric Veiel (CIO)
M&A vs buybacks strategy
Q (William Katz · TD Cowen): Why not be more aggressive with M&A to shift the business mix or more aggressive on buybacks given the active equity decline and areas that need scale?
A: Management said there are timing and blackout-period reasons for recent inactivity in repurchases and cautioned against doing M&A for its own sake. They view M&A as a tool to accelerate growth where there is cultural alignment, financial fit and strategic clarity, and their teams are evaluating opportunities but maintain a high bar to avoid harming clients or the business.
"I think you can do more harm than good if you do M&A for M&A's sake." — Robert Sharps (CEO·CHAIR)
Lead time for year-end plan redemptions
Q (Patrick Davitt · Autonomous): When do you usually learn about year-end plan redemptions or wins — how much lead time do you get?
A: Management said they typically see a fair amount of lead time around new plan wins and plan terminations, with approximate visibility of 4 to 6 months. They also noted some variability around year-end and that whether business is recorded late December or early January usually does not change the underlying economics of the business.
"We typically do see a fair amount of lead time in the short term around new plan wins as well as plan terminations." — Dorothy Sawyer