T. Rowe Price Group Inc. has projected that clients are likely to withdraw more than $26.3 billion in the fourth quarter, marking a continuation of the trend where investors are moving away from actively managed mutual funds in favor of more cost-effective alternatives or cash money-market holdings. The asset management firm disclosed a preliminary net outflow of $6.3 billion in October, anticipating further withdrawals exceeding $20 billion in total for November and December, according to a statement released on Friday.
With headquarters in Baltimore and $1.3 trillion in client assets as of the end of October, T. Rowe cited a few significant client withdrawals as contributing to the elevated outflows.
Analysts from Keefe, Bruyette & Woods, Michael Brown, and Aidan Hall, noted that T. Rowe had previously indicated an expectation of high outflows for the fourth quarter. However, they acknowledged that the extent of the outflows was not fully anticipated by both analysts and the broader financial community.
Following the warning, T. Rowe Price’s shares experienced a decline of up to 4.1%, but later recovered to a 1.7% loss by 11:22 a.m. in New York.
The broader industry, particularly firms heavily reliant on actively managed strategies, has faced a wave of redemptions over the past few years. Many have responded by diversifying into more cost-efficient index funds and exploring specialized alternative assets, such as private credit.
T. Rowe reported a decrease in assets within its equity funds, some of which experienced outflows, with total equity fund assets amounting to $668 billion at the close of October.
