T. Rowe Price recently unveiled its financial outcomes for the second quarter of 2026, showcasing a notable increase in assets under management (AUM) to $1.89 trillion, a testament to positive market trends. Despite this growth, the firm contended with net client outflows, predominantly stemming from active equity investments. In response, the company is vigorously pursuing strategic initiatives, including the expansion of its Exchange-Traded Fund (ETF) and Separately Managed Account (SMA) offerings, the integration of artificial intelligence into its operations, and key leadership adjustments designed to steer the firm towards sustained expansion and enhanced client engagement in an evolving financial landscape. The earnings call provided an in-depth look at these efforts and their anticipated impact.
During the Q2 2026 earnings call, held on Friday, July 31, 2026, at 8:00 a.m. ET, key executives, including Chairman and CEO Rob Sharps, CFO Jen Dardis, and newly appointed President Eric Veiel, discussed the company's performance and future outlook. The firm reported an adjusted diluted earnings per share of $2.57, an improvement from previous quarters, and an adjusted net revenue of $1.9 billion, marking an 8.5% increase year-over-year. This revenue growth was largely attributable to higher average AUM, partially offset by shifts in accrued carried interest. The company’s AUM growth was robust, reaching $1.89 trillion by June 30, 2026, a 10.7% rise from the prior quarter, driven primarily by market appreciation.
However, T. Rowe Price faced net client outflows totaling $6.5 billion in Q2 2026. This was mainly due to $13.5 billion in equity outflows, though these were somewhat mitigated by inflows into fixed income, multi-asset, and alternative strategies. The effective fee rate, excluding performance fees, slightly decreased to 38.1 basis points, reflecting a strategic shift towards lower-fee products and vehicles. Adjusted operating expenses increased by 4.9% year-over-year to $1.2 billion, influenced by market-driven costs, product record-keeping, and technology investments. For the full year 2026, the company anticipates adjusted operating expense growth (excluding carried interest) to be between 4% and 7% over the 2025 base of $4.6 billion, signaling continued investment in key growth areas like ETFs and SMAs.
In terms of specific growth initiatives, the ETF business reached $30 billion in AUM across 34 funds, with $4.4 billion in net inflows during the quarter. The SMA platform expanded to $20 billion in AUM across 43 products, underscoring its potential as a growth driver. The firm also highlighted its strategic alliance with Goldman Sachs, initiating new interval funds to broaden its offerings. Significant advancements were noted in artificial intelligence adoption, with over 130 AI solutions deployed and an associate adoption rate exceeding 70%, aiming to enhance decision-making and operational efficiency. Leadership transitions saw Eric Veiel appointed as President and Sébastien Page as Co-Head of Global Investments, strategically positioning the firm for its upcoming 90th anniversary and future expansion.
Overall, T. Rowe Price's second quarter of 2026 revealed a firm navigating a complex market with strategic foresight. Despite the challenges posed by outflows in active equity and fee compression, the company demonstrated resilience through substantial AUM growth, robust revenue increases, and a clear commitment to diversifying its product offerings. The emphasis on expanding into ETFs, SMAs, and alternative investments, alongside leveraging AI and implementing focused leadership changes, underscores a forward-looking strategy aimed at sustaining competitive advantage and meeting evolving client demands. The firm's proactive approach to expense management and capital allocation further reinforces its dedication to long-term value creation, even as it prepares for potentially more challenging market conditions in the latter half of the year.