(Bloomberg News) T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, fell the most in almost 18 months after investors withdrew money and the company missed analysts' earnings estimates.

The company fell 8 percent to $51.50 at 9:46 a.m. in New York trading after being down as much as 10 percent. T. Rowe Price has declined 20 percent this year, compared with the 23 percent drop for the Standard & Poor's 19-member index of asset managers and custody banks.

"T. Rowe is not immune to the challenging macro environment, even after clearly demonstrating a consistency of flows and asset growth in the past," Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York, said in a telephone interview.

Investors pulled $2.6 billion, the first client withdrawals since the fourth quarter of 2008, and market losses reduced assets by another $64.8 billion to $454 billion, the Baltimore- based company said today in a statement. Continued deposits to retirement-oriented products, which Chief Executive Officer James Kennedy has steadily built, failed to offset redemptions by institutional clients.

Net income climbed 9.6 percent to $184.6 million, or 71 cents a share, from $168.4 million, or 64 cents, a year earlier, according to the statement. The average estimate of 18 analysts surveyed by Bloomberg was for profit of 74 cents a share.

Revenue Increases

"When equity markets are getting hit, we will get hit more because we are more heavily equity weighted," Kennedy said today in an interview.

T. Rowe Price has about 79 percent of assets invested in equities. Global stocks, as measured by the the MSCI AC World Index, fell 8 percent in the year ended Sept. 30, and declined 7 percent this year through yesterday.

Compared with a year earlier, assets rose 3.1 percent to $454 billion after rising to a record high $521 billion at the end of the second quarter. That helped revenue increase 16 percent to $679 million. Expenses climbed 19 percent to $384 million.

Institutional investors withdrew $2.4 billion, including a single client that pulled about $1.3 billion from an equity investment, Kennedy said. Mutual funds lost $200 million in redemptions. Target-date retirement funds, which automatically shift to more conservative investments as a client ages, attracted $1.2 billion.

T. Rowe is the third-largest U.S. manager of target-date retirement funds. Vanguard Group Inc. of Valley Forge, Pennsylvania, and Boston's Fidelity Investments are the largest U.S. providers.

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