T. Rowe Price Group Inc. warned that client redemptions will probably continue with investors yanking money from US growth equity funds that have struggled during this year’s market rout.
The money manager “has been hit particularly hard” from the performance of its US stock funds as well as industry trends such as the shift toward cheaper exchange-traded funds, Chief Executive Officer Rob Sharps told analysts on a conference call Thursday.
“We expect pressure on flows to persist,” Sharps said, adding that his goal is to return to positive net flows in one to three years. “We really need to just do a better job of execution.”
The warning, coming toward the end of the third quarter, underscores the struggles facing Baltimore-based T. Rowe, whose shares have tumbled more than 40% this year. Net outflows totaled $20 billion in the first half, and an additional $11.1 billion are expected in the third quarter, according to the average estimate of analysts surveyed by Bloomberg.
Sharps said the firm plans to offer more strategies involving exchange-traded funds and separately managed accounts and grow its alternative-assets business following the acquisition of Oak Hill Advisors late last year. T. Rowe has also sought to rein in expenses, including by slowing hiring.
“We have a bit of opportunity to return to a positive net flow position,” Sharps said, “but I think it’s going to take some time.”
This article was provided by Bloomberg News.