T. Rowe Price Sees Client Redemptions Continuing Into 2022

(Bloomberg) -- T. Rowe Price Group Inc. tumbled more than 4% Thursday, the most among major U.S. financial stocks, after the firm said client redemptions may continue with the Federal Reserve poised to raise interest rates.

“That tends not to be great for a growth style of investing,” Chief Executive Officer Rob Sharps said in a phone interview after the $1.69 trillion money manager posted fourth-quarter results. “We’re disproportionately exposed to growth as a strategy, and if that’s out of favor that will be difficult for us to overcome.”

Shares of Baltimore-based T. Rowe slid 4.4% to $149.77 at 12:23 p.m. in New York, the worst performance among 67 companies in the S&P 500 Financials Index. 

It’s the 11th straight day of declines for the stock, a record. 

Net client outflows totaled $22.7 billion in the last quarter, bringing the 2021 total to $28.5 billion, according to a statement. 

“We had what I would characterize as pretty meaningful outflows in our U.S. equity business,” Sharps said in the interview. “They were at a level that we really haven’t experienced in the past, and I think we see that trend continuing to some extent early in 2022.”

Other fourth-quarter earnings highlights:

• Adjusted earnings per share were $3.17, beating the average Wall Street estimate by 6 cents.
• Adjusted net revenue of $1.96 billion also topped estimates
• Sharps said he expects demand for alternative assets, such as private credit, to continue even as the Fed raises rates

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