(Bloomberg News) T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, said second-quarter profit rose 0.9 percent, missing analysts' estimates as slumping global stock markets eroded assets.
Net income allocated to common stockholders increased to $205.6 million, or 79 cents a share, from $203.8 million, or 76 cents, a year earlier, the Baltimore-based company said today in a statement. T. Rowe Price missed the 80 cents per share estimate of nine analysts surveyed by Bloomberg.
Declining global markets sent T. Rowe Price's assets down by 2.4 percent in the quarter to $541.7 billion. Investors added $4.7 billion in deposits, down from a record $12.4 billion in the first quarter. Investor sentiment soured in the quarter, as economic conditions appeared to weaken in the U.S., China and Europe, James Kennedy, T. Rowe Price's chief executive officer, said today in a telephone interview.
"In the last couple of months, the economic momentum we saw earlier in the year seems to be in question and flows slowed down a wee bit," Kennedy said.
T. Rowe Price fell 2.8 percent to close at $58.97 in New York trading. The shares gained 3.6 percent this year compared with a 2.9 percent increase in the 20-member Standard & Poor's index of custody banks and asset managers.
T. Rowe Price's assets under management declined by $17.8 billion because of market losses, as the MSCI ACWI index of global stocks declined 6.6 percent in the second quarter.
T. Rowe Price has benefited as investment performance at funds beat rivals and retirement-oriented offerings drew investors. The firm has gathered deposits even as investors withdrew $42.6 billion from funds that buy U.S. stocks in the first six months of 2012, data from Chicago-based Morningstar Inc. show.
BlackRock Inc., the world's largest asset manager, had net client redemptions of $29.4 billion in the second quarter, including $31.6 billion in planned dispositions of advisory portfolios, the company reported.
At the end of June, 73 percent of T. Rowe Price's mutual funds beat the average return posted by competitors over three years and 85 percent outperformed for five years, the company said, citing data compiled by Denver-based research firm Lipper.
T. Rowe Price had $71 billion in its target-date retirement funds as of June 30, third-most in the industry behind Boston-based Fidelity Investments and Valley Forge, Pennsylvania-based Vanguard Group Inc., according to Morningstar. Retirement funds attracted $2.8 billion in the second quarter, the company said.
The firm's revenues rose 3.2 percent from the second quarter a year earlier to $736.8 million, trailing the $753.8 million estimate by 14 analysts surveyed by Bloomberg. Operating expenses climbed 5.6 percent from a year earlier to $408.8 million.
In the five years ended June 30, T. Rowe Price's shares rose at an average annual pace of 6.1 percent compared with an annual loss of 6.7 percent for the Standard & Poor's index of custody banks and asset managers, according to data compiled by Bloomberg.