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T. Rowe Price’s Managed Assets Rose Due to Market Appreciation

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Market appreciation

T. Rowe Price’s (TROW) mutual funds’ net cash flows after client transfers accounted for net outflows of $0.2 billion from the stocks and blended asset funds in 3Q16. These outflows were partially offset by net inflows of $3.1 billion into bond and money market funds. The funds also saw a market appreciation of $36.5 billion during the quarter. It showed the portfolio companies’ strong performance.

For other investment portfolios, T. Rowe’s net cash inflows in 3Q16 were $0.2 billion. The cash inflows were fixed income, money market totaling $2.1 billion. They were partially offset by outflows of $1.9 billion from stocks and blended assets.

T. Rowe’s net inflows number includes $1.9 billion that originated in its target-date retirement portfolios. Its assets under management for target date retirement funds stood at $189 billion on September 30, 2016.

T. Rowe also invested $112.5 million during the first nine months of 2016 in capitalized technology and facilities. The company expects capital expenditures for 2016 to be up to $165 million, two-third of which is planned for technology initiatives.

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Dividends and repurchases

T. Rowe’s dividend yield stood at 2.9%—higher than the broad market’s dividend yield of 2.0%. In 3Q16, T. Rowe declared a dividend of $0.54. The dividend translated into an annualized dividend yield of ~2.9%. In comparison, T. Rowe’s competitors have the following yields:

  • BlackRock (BLK) – 2.5%
  • Bank of New York Mellon (BK) – 1.6%
  • State Street (STT) – 2.0%

Together, these companies form 1.8% of the SPDR S&P 500 ETF (SPY).

The company pays special dividends alongside regular dividends. In the past five years, it paid two special dividends. It maintained a healthy payout ratio of almost 50%, which is higher than the industry peers.

In the first nine months of 2016, T. Rowe repurchased 8 million shares, or 3% of its outstanding stock, for a total of $546.9 million. It’s important to note that 4.4 million shares were purchased in 3Q16 for $303 million.

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