T Rowe Price Group Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Cyprys - Morgan Stanley - Analyst : Hi, good morning. Thanks for taking the question of. Maybe just to kick off on ETFs, great to see the expanded flows and reaching 12.5 billion of AUM. There are just hoping you can elaborate on the steps that you're taking to drive this early success. How you see your ETF business progressing over the next 12 to 24 months of it? Just more broadly on ETFs. Are you thinking about the opportunity set for each share class on logistics strategies of bank, our size of the ETFs, your costs expired? Maybe just talk about the opportunity set that you see for the industry and strategic about how you might see that playing out. What's the path of timing look like from that? Thank you.

Question: Benjamin Theurer - Barclays - Analyst : Hi, good morning and thanks for taking the question. Rob, you talked a little bit about credit in your prepared remarks and the sort of some private lending environment. Could you perhaps remind us how much of your AUM is related to direct lending? And then for oh credit, I was wondering, can you give us an update in terms of what you're seeing in April? Any sort of change investor appetite would be helpful. Thank you.

Question: Craig Siegenthaler - Bank of America - Analyst : Good morning, Rob. Our question is on the potential for alternative investments to gain access to the US retirement channel. So we've all seen several announcements from some of your biggest competitors forming partnerships with private markets firm. So what are your updated thoughts on form we have private market partnership? Do you need to? And also what are your thoughts on ought to gain share pretty much from zero in foreign K. plans and target date funds? Thank you.

Question: Daniel Fannon - Jefferies - Analyst : Good morning. Wanted to talk about flows and really the gross sales versus gross redemptions kind of backdrop and clearly a lot of volatility in the market. But as you think about what we saw in the first quarter and then here in April, but then more importantly, like discussions in backlog and kind of sales momentum as you think about this year, any color on either from a product asset class or channel would be helpful.

Question: Matthew Ramsay - TD Cowen - Analyst : Hi, good morning. This is Matthew on for Bill. So Craig front end. My question on the alts partnership. So maybe I'll ask a question about fee rate dynamics in the quarter. What the DID. rate look like coming out of the quarter? What are you seeing in April? And maybe how should we think about those dynamics going into the rest of 2025? Thanks for the question. And if we think about fee rate, given the breadth of our asset classes, strategies and vehicles that we offer, a lot goes into the effective fee rate and it can really vary quarter to quarter. So I'll give you some context for what happened this quarter. But I think it's always better to think about it on a multi-quarter basis as opposed to kind of one quarter to the next in Q one, about 60% of the impact in the decrease in effective fee rate came from more structural shifts in the type of investment strategies and vehicle that we're selling at the margin. And we're seeing that persistent trend toward lower cost vehicles such as ETFs, collective investment trusts and separate accounts. And on the investment strategy side and particularly within our targeted franchise, you're actually seeing the impact of both vehicle and investment strategy as we've seen uptake in our blend products and in the collective trusts vehicle, that other 40% is more cyclical with the overall mix of AUM and both from market and flow impacts. So as an example, this quarter, you'll see in there in the release, equity assets under management declined from about 52% to about 49% of AUM in the quarter, while fixed income and multi-asset with increased as a percentage. So you would say that this quarter the impact was more significant than typical because of the equity market decline. It's hard to predict going forward with that portion of it will be that's certainly the structural changes will be persistent. Thank you.

Question: Alexander Blostein - Goldman Sachs - Analyst : Good morning. Thanks for the question. I'm sorry how to ask a little bit of a boring question. But given the volatility in the market, I don't envy your ability to, I guess, budget right now given the swings we've seen. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, TROW.OQ - Q1 2025 T Rowe Price Group Inc Earnings Call So just maybe help us understand the drivers between sort of the original guide versus we are now and as up the point, I guess, in April, did you guys the guys in terms of like what are you assuming for equity market returns that's baked into guidance?

Question: Kenneth Worthington - JP Morgan - Analyst : Good morning. Thanks for taking the question. I wanted to take into the expansion of retirement outside the US that you had mentioned in your prepared remarks. So you mentioned expansion, retirement and helpful countries in Asia, Canada, I think you mentioned Europe, Tom, you mentioned leveraging the glide path and structural expertise. What exactly are you selling? Are you actually launching? I think it's like Korean Japanese Canadian target date funds for is what you're doing there, more nuanced. I guess the second part is you leverage record-keeping in the US to kind of build out that US retirement business. I know it's more DCF to sales right now, but as I think it started with record keeping. And then lastly, one of the themes in US retirement is customization. Is this happening outside the US as well?

Question: Mike Brown - Wells Fargo Securities - Analyst : Good morning. Thanks for taking my question. Just wanted to ask on the balance sheet. So we observed that our cash has now increased to about 2.8 billion. And Tom, you wanted to maybe touch on capital allocation. How are you thinking about some part of a small number of different that, Tom, given that the opportune, Steve, would you increase the share buybacks? How are you thinking about inorganic growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, TROW.OQ - Q1 2025 T Rowe Price Group Inc Earnings Call And when you think about the opportunities on the inorganic growth side will be some of the areas that you would be kind of focused on. Do you still you still thinking about expanding the credit markets on capabilities or something that would be interesting to you as you think about inorganic growth? Thank you.