T Rowe Price Group Inc Q4 2024 Earnings Call Transcript

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

Question: Bill Katz - TD Cowen - Analyst : Great, thank you very much. Appreciate the extra disclosure and color this quarter. Just coming maybe where you ended the conversation, a couple of days ago, you announced a venture with Ares and Aspida. And I was just sort of wondering if you could tie together a couple of points associated REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 1:00PM, TROW.OQ - Q4 2024 T Rowe Price Group Inc Earnings Call with that. First, just how do you think about the opportunity set in insurance and maybe talk through how many other platforms you might be working with? Secondly, you mentioned in your prepared comments that you sort of tweak it around on alts into retirement. I'm wondering if this relationship would be portending anything along the way? And then third, I'm sorry if I missed the question. How do you think about M&A here to continue to expand your product set in a world where public and private investment seems to be converging? Thank you.

Question: Benjamin Budish - Barclays Capital Inc - Analyst : Hi, good morning and thank you for taking the question. I wanted to ask a question about, Jen, your comments on sort of the fee rate dynamics in the quarter. You mentioned that a large portion of sales were in strategies with lower-than-average rates and a portion of redemptions were in asset classes with higher-than-average fee rates. So just curious, what did the sort of exit fee rate look like coming out of the quarter? What are you seeing in January? And how should we think about those sort of dynamics into 2025? Thank you.

Question: Glenn Schorr - Evercore ISI - Analyst : Hello, thanks very much. So I have a question that kind of spans across OHA, Aspida and your insurance comments. And it's more of what you're seeing for -- in terms of client demand or the potential for hybrid products across public and private, particularly in fixed income. And what really peaked my interest is, in your prepared remarks, you talked about doing both public and private for Aspida. So I don't know if you could comment on, is that a set allocation? Or do you manage actively across public and private for them? So big picture of more hybrid potential and managing actively across public and private? Thanks so much.

Question: Craig Seigenthaler - Bank of America - Analyst : Thanks. Good morning, everyone. Just following up on Glenn's question, but I really wanted to focus on the [401k] channel, so not insurance with Aspida. But is T. Rowe Price planning to make 100% of future private equity or private credit allocations to retirement products from internal capabilities, including leveraging OHA? And could this trigger future strategic M&A in white spaces? Or will T. Rowe look to form partnerships with third parties, which could include in Ares?

Question: Daniel Fannon - Jefferies - Analyst : Thanks, good morning. Wanted to expand upon your comments around gross sales trends. Rob, you were quite optimistic around the improvement you're seeing. Could you give a little more context around maybe the backlog and particularly maybe in the target date side of the business and maybe on the institutional side, where you have a little bit more line of sight and any granularity or context around kind of versus prior periods would be helpful? Thank you.

Question: Patrick Davitt - Autonomous Research - Analyst : Hey, good morning, everyone, thanks for the question. You've mentioned the offsetting wins in December a few times. Would it be possible to get a little -- dig in a little bit more on the color of those wins and possibly frame the scale of those wins as we think about the repeatability of things like that? Thank you.

Question: Kenneth Worthington - JP Morgan - Analyst : Hi, thanks for taking the question. So equity outflows have been elevated in recent years. Performance was an issue. Is performance -- is improving performance enough to turn the tide and move your equity franchise back to positive sales? Or do you really need more at this point given how the market, the ecosystem has sort of evolved? And so when we think about the innovation that you're pursuing, product structure, distribution, what do you see as most likely to drive improved equity sales of the initiatives that you have underway? And ultimately, what are you most excited about in terms of what could move the needle?

Question: Brennan Hawken - UBS - Analyst : Good morning. Thanks for taking my question. I was curious to touch on the expense outlook. So thanks for providing that. I know that sometimes you provide the expense outlook as of -- not necessarily as of the first day of the quarter, but intra-quarter. So is that the case? And could you let us know what date that is and what's your market assumptions? And also, you flag real estate costs. I'm guessing that's the HQ move. Can you give a sense of magnitude there? And is that just going to be a 2025 event? Thank you.

Question: Alexander Blostein - Goldman Sachs - Analyst : Thanks. Good morning. Thanks for squeezing in here. I wanted to ask about an interim target or medium-term thought around the expense management for the business. Very encouraging to obviously hear the flow commentary for 2025. That said, we all know that the fee rates matter more than the flows, right? So when you kind of think about the areas where you guys are seeing traction, those tend to be a lower fee rate than the back book. So with that in mind, as you think about expenses and call it 1/3, I think, has been historically relatively tied to the market or revenue levels, the other two-third used to grow probably in the mid-single-digit range, maybe a little below that, is there room to bend that kind of non-sort of variable part of the expense base to be more aligned with the organic revenue growth? And what would that look like?