T Rowe Price Q4 2025 T Rowe Price Group Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 T Rowe Price Group Inc Earnings Call
Speaker #1: Good morning. My name is Daniel, and I will be your conference facilitator today. Welcome to TROWE PRICES, fourth quarter, 2025 earnings conference call. All participants will be in listen-only mode until the question-and-answer period.
Operator: Good morning. My name is Daniel, and I will be your conference facilitator today. Welcome to T. Rowe Price's Q4 2025 Earnings Conference Call. All participants will be in listen-only mode until the question and answer period. I will give you instructions on how to ask questions at that time. As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website shortly after the call concludes. I will now turn the call over to Linsley Carruth, T. Rowe Price's Director of Investor Relations.
Operator: Good morning. My name is Daniel, and I will be your conference facilitator today. Welcome to T. Rowe Price's Q4 2025 Earnings Conference Call. All participants will be in listen-only mode until the question and answer period. I will give you instructions on how to ask questions at that time. As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website shortly after the call concludes. I will now turn the call over to Linsley Carruth, T. Rowe Price's Director of Investor Relations.
Speaker #1: I will give you instructions on how to ask questions at that time. reminder, this call is being As a on TROWE PRICES' website shortly after the call concludes.
Speaker #1: I will now turn the call over to Linsley Carruth, T. Rowe Price’s Director of Investor Relations.
Speaker #2: Hello, and thank you for joining us today for our fourth quarter earnings call. The press release and the supplemental materials document can be found on our IR website at investors.trprice.com.
Linsley Carruth: Hello, and thank you for joining us today for our Q4 earnings call. The press release and the supplemental materials document can be found on our IR website at investors.troweprice.com. Today's call will last approximately 45 minutes. Our Chair, CEO, and President, Rob Sharps, and CFO, Jen Dardis, will discuss the company's results for about 15 minutes. Then we'll open it up to your questions, at which time we'll be joined by our Head of Global Investments, Eric Veiel. We ask that you limit it to one question per participant. I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain non-GAAP financial measures. Please refer to the forward-looking statement language and the reconciliations to GAAP in the supplemental materials, as well as in our press release.
Hello, and thank you for joining us today for our Q4 earnings call. The press release and the supplemental materials document can be found on our IR website at investors.troweprice.com. Today's call will last approximately 45 minutes. Our Chair, CEO, and President, Rob Sharps, and CFO, Jen Dardis, will discuss the company's results for about 15 minutes. Then we'll open it up to your questions, at which time we'll be joined by our Head of Global Investments, Eric Veiel. We ask that you limit it to one question per participant. I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain non-GAAP financial measures. Please refer to the forward-looking statement language and the reconciliations to GAAP in the supplemental materials, as well as in our press release.
Speaker #2: Today's call will last approximately 45 minutes. Our chair, CEO, and president, Rob Sharps, and CFO, Jen Dardis, will discuss the company's results for about 15 minutes.
Speaker #2: Then we'll open it up to your questions, at which time we'll be joined by our head of global investments, Eric Veiel. We ask that you limit it to one question per participant.
Speaker #2: I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain the forward-looking statement language and the reconciliations to GAAP in the supplemental materials as well as in our press non-GAAP financial measures.
Speaker #2: Release. Discussions related to the funds are intended to demonstrate their contribution to the organization's results and are not—please refer to recommendations. All investment performance references to peer groups on today's call are using Morningstar peer groups and for the quarter that ended December 31, 2025.
Linsley Carruth: Discussions related to the funds is intended to demonstrate their contribution to the organization's results and are not recommendations. All investment performance references to peer groups on today's call are using Morningstar peer groups and for the quarter that ended December 31, 2025. Now I'll turn it over to Rob.
Linsley Carruth: Discussions related to the funds is intended to demonstrate their contribution to the organization's results and are not recommendations. All investment performance references to peer groups on today's call are using Morningstar peer groups and for the quarter that ended December 31, 2025. Now I'll turn it over to Rob.
Speaker #2: Now I'll turn it over
Speaker #2: to Rob. Thank you,
Rob Sharps: Thank you, Linsley, and thank you all for joining today's call. 2025 brought a third straight year of strong global market returns, though it remains a narrow market dominated by a handful of mega cap stocks and with riskier names outperforming quality and value. While this market growth served as a tailwind for our assets under management and investment advisory revenue, it was not an environment that was highly conducive to fundamental research, active management, and long-term investing. But we did see some evidence of a market broadening in the fourth quarter, which would be a positive for fundamental, research-driven, active management. We closed the year with $1.78 trillion in assets under management, up over 10% from the start of the year, despite $56.9 billion in net outflows.
Robert W. Sharps: Thank you, Linsley, and thank you all for joining today's call. 2025 brought a third straight year of strong global market returns, though it remains a narrow market dominated by a handful of mega cap stocks and with riskier names outperforming quality and value. While this market growth served as a tailwind for our assets under management and investment advisory revenue, it was not an environment that was highly conducive to fundamental research, active management, and long-term investing. But we did see some evidence of a market broadening in the fourth quarter, which would be a positive for fundamental, research-driven, active management. We closed the year with $1.78 trillion in assets under management, up over 10% from the start of the year, despite $56.9 billion in net outflows.
Speaker #3: Linsley: And thank you all for joining today's call. 2025 brought and remains a narrow market dominated by a handful of mega-cap stocks, with riskier names outperforming quality and value. While this market growth served as a tailwind for our assets under management and investment advisory revenue, it was not an environment that was highly conducive to fundamental research, active management, and long-term investing.
Speaker #3: But we did see some evidence of a market broadening in the fourth quarter, which would be a positive for fundamental research-driven active management. We closed the year with 1.78 trillion in assets under management, up over 10% from the start of the year, despite 56.9 billion in net outflows.
Speaker #3: Net outflows were concentrated in our equity and mutual fund business, with 75 billion of net outflows from equity, and on a vehicle basis, almost 64 billion from mutual funds in 2025.
Rob Sharps: Net outflows were concentrated in our equity and mutual fund business, with $75 billion of net outflows from equity, and on a vehicle basis, almost $64 billion from mutual funds in 2025. Importantly, we saw an increase in gross sales, which were higher than 2024 and up over 40% from 2023. Offsetting these higher gross sales were redemptions that were greater than anticipated and were driven by performance shortfalls in certain strategies, and from portfolio rebalancing due to elevated equity markets. We generated over $2 billion of free cash flow in 2025 and returned nearly $1.8 billion of cash to our stockholders. We also extended our long history of increasing our regular dividend, marking our 39th consecutive year of increases since our IPO in 1986. We are building momentum across our strategic initiatives.
Robert W. Sharps: Net outflows were concentrated in our equity and mutual fund business, with $75 billion of net outflows from equity, and on a vehicle basis, almost $64 billion from mutual funds in 2025. Importantly, we saw an increase in gross sales, which were higher than 2024 and up over 40% from 2023. Offsetting these higher gross sales were redemptions that were greater than anticipated and were driven by performance shortfalls in certain strategies, and from portfolio rebalancing due to elevated equity markets. We generated over $2 billion of free cash flow in 2025 and returned nearly $1.8 billion of cash to our stockholders. We also extended our long history of increasing our regular dividend, marking our 39th consecutive year of increases since our IPO in 1986. We are building momentum across our strategic initiatives.
Speaker #3: Importantly, we saw an increase in gross sales, which were higher than 2024 and up over 40% from 2023. Offsetting these higher gross sales were redemptions that were greater than anticipated and were driven by performance shortfalls in certain strategies and from portfolio rebalancing due to elevated equity $2 billion of free cash flow in markets.
Speaker #3: We generated over 2025 and returned nearly $1.8 billion of cash to our stockholders. We also extended our long history of increasing our regular dividend, marking our 39th consecutive year of increases since our IPO in 1986.
Speaker #3: We are building momentum across our strategic initiatives. I remain confident in our plan and our ahead. With that, I'll turn to investment performance. We are seeing improvement in the performance of several key strategies and continue to have strong long-term performance across a range of strategies and asset classes.
Rob Sharps: I remain confident in our plan and our people, and I look forward to what's ahead. With that, I'll turn to investment performance. We are seeing improvement in the performance of several key strategies and continue to have strong long-term performance across a range of strategies and asset classes. While we're headed in the right direction, there remains room for further improvement. About half of our funds beat their peer groups across the time periods, with 49, 56, 46, and 61% outperforming on the one-, three-, five-, and 10-year time periods, respectively. For the three-, five-, and 10-year time periods, asset-weighted performance is stronger, with 72, 54, and 79% of fund assets beating their peer groups for the respective periods. For the one-year time period, 42% of fund assets beat their peer groups.
Robert W. Sharps: I remain confident in our plan and our people, and I look forward to what's ahead. With that, I'll turn to investment performance. We are seeing improvement in the performance of several key strategies and continue to have strong long-term performance across a range of strategies and asset classes. While we're headed in the right direction, there remains room for further improvement. About half of our funds beat their peer groups across the time periods, with 49, 56, 46, and 61% outperforming on the one-, three-, five-, and 10-year time periods, respectively. For the three-, five-, and 10-year time periods, asset-weighted performance is stronger, with 72, 54, and 79% of fund assets beating their peer groups for the respective periods. For the one-year time period, 42% of fund assets beat their peer groups.
Speaker #3: While we're headed in the right direction, there remains room for further improvement. About half of our funds beat their peer groups across the time periods, with 49, 56, 46, and 61% outperforming on the one, three, five, and 10-year time periods, respectively.
Speaker #3: For the three, five, and 10-year time periods, asset-weighted performance is stronger, with 72, 54, and 79% of fund assets beating their peer groups for the respective periods.
Speaker #3: For the one-year time period, 42% of fund assets beat their peer groups. On an asset-weighted basis, over half of our equity funds beat their peer groups on a three and five-year basis, and over 70% beat their peers for the 10-year period.
Rob Sharps: On an asset-weighted basis, over half of our equity funds beat their peer groups on a 3- and 5-year basis, and over 70% beat their peers for the 10-year time period. Fixed income continued to deliver strong performance, with over 75% of fund assets beating their peer groups across the 1-, 3-, 5-, and 10-year time periods. Long-term performance in our target date franchise remains strong, with 81%, 55%, and 98% of fund assets outperforming the 3-, 5-, and 10-year time periods, respectively. Several very strong quarters in 2020 that have been rolling off have been a recent drag on the 5-year performance numbers. Returns for the 1-year time period were weaker, with 29% of fund assets outperforming peers.
Robert W. Sharps: On an asset-weighted basis, over half of our equity funds beat their peer groups on a 3- and 5-year basis, and over 70% beat their peers for the 10-year time period. Fixed income continued to deliver strong performance, with over 75% of fund assets beating their peer groups across the 1-, 3-, 5-, and 10-year time periods. Long-term performance in our target date franchise remains strong, with 81%, 55%, and 98% of fund assets outperforming the 3-, 5-, and 10-year time periods, respectively. Several very strong quarters in 2020 that have been rolling off have been a recent drag on the 5-year performance numbers. Returns for the 1-year time period were weaker, with 29% of fund assets outperforming peers.
Speaker #3: Fixed income continued to deliver strong performance, with over 75% of fund assets beating their peer groups across the one-, three-, five-, and 10-year time periods.
Speaker #3: Long-term performance in our target date franchise remained strong, with 81, 55, and 98% of fund assets outperforming the three, five, and 10-year time periods, respectively.
Speaker #3: Several very strong quarters in 2020 that have been rolling off have been a recent drag on the five-year performance numbers. Returns for the one-year time period were weaker, with 29% of fund assets outperforming peers.
Rob Sharps: This was driven by a slightly lower weight to international equities than some peers and by security selection in some of the underlying portfolios, primarily in the Q2 and Q3 of 2025. Across alternatives, performance for the quarter was generally strong amid a more discerning credit backdrop. Credit selection continued to be highly effective, as it successfully avoided any exposure to widely publicized frauds or failures. Beyond investment performance, in 2025, we continued to make progress on our strategic initiatives. We established a strategic collaboration with Goldman Sachs to pursue opportunities in wealth and retirement through co-developed public-private offerings and advice solutions. In the Q4, we launched the first co-branded model portfolios, including four portfolios that are now live on the GeoWealth platform and a fifth expected in the first half of 2026.
Robert W. Sharps: This was driven by a slightly lower weight to international equities than some peers and by security selection in some of the underlying portfolios, primarily in the Q2 and Q3 of 2025. Across alternatives, performance for the quarter was generally strong amid a more discerning credit backdrop. Credit selection continued to be highly effective, as it successfully avoided any exposure to widely publicized frauds or failures. Beyond investment performance, in 2025, we continued to make progress on our strategic initiatives. We established a strategic collaboration with Goldman Sachs to pursue opportunities in wealth and retirement through co-developed public-private offerings and advice solutions. In the Q4, we launched the first co-branded model portfolios, including four portfolios that are now live on the GeoWealth platform and a fifth expected in the first half of 2026.
Speaker #3: Lower weight to international equities than some peers, and by security selection in some of the underlying portfolios. This was driven by a slightly lower weight, primarily in the second and third quarters of 2025.
Speaker #3: Across alternatives, performance for the quarter was generally strong, amid a more discerning credit backdrop. Credit selection continued to be highly effective, as it successfully avoided any exposure to widely publicized frauds or failures.
Speaker #3: Beyond investment performance, in 2025 we continued to make progress on our strategic initiatives. We established a strategic collaboration with Goldman Sachs to pursue opportunities in wealth and retirement through co-developed public-private offerings and advice solutions.
Speaker #3: And in the fourth quarter, we launched the first co-branded model portfolios, including four portfolios that are now live on the GOW platform and a fifth expected in the first half of 2026.
Speaker #3: In January, we launched one of the model series, the Goldman Sachs T ROWE Price Dynamic ETF portfolio, on the Morgan Stanley platform. We extended our retirement leadership globally with a sub-advised retirement date fund series in partnership with a Japanese asset manager and two new retirement allocation funds with a strategic partner in Asia.
Rob Sharps: In January, we launched one of the model series, the Goldman Sachs T. Rowe Price Dynamic ETF Portfolio, on the Morgan Stanley platform. We extended our retirement leadership globally with a sub-advised retirement date fund series in partnership with a Japanese asset manager and two new retirement allocation funds with a strategic partner in Asia, marking the first time a US asset manager offered retirement-focused products to retail investors in Hong Kong and Singapore. Additionally, we saw growth in the Canadian Target Date series we launched in 2024. We maintained our position as an industry leader in active target date solutions, building on over 20 years of product innovation and surpassing $560 billion in assets under management across a diverse suite of solutions.
Robert W. Sharps: In January, we launched one of the model series, the Goldman Sachs T. Rowe Price Dynamic ETF Portfolio, on the Morgan Stanley platform. We extended our retirement leadership globally with a sub-advised retirement date fund series in partnership with a Japanese asset manager and two new retirement allocation funds with a strategic partner in Asia, marking the first time a US asset manager offered retirement-focused products to retail investors in Hong Kong and Singapore. Additionally, we saw growth in the Canadian Target Date series we launched in 2024. We maintained our position as an industry leader in active target date solutions, building on over 20 years of product innovation and surpassing $560 billion in assets under management across a diverse suite of solutions.
Speaker #3: Marking the first time a US asset manager offered retirement-focused products to retail investors in Hong Kong and Singapore. Additionally, we saw growth in the Canadian target date series we launched in 2024.
Speaker #3: We maintained our position as an industry leader in active target date solutions, building on over 20 years of product innovation and surpassing 560 billion in assets under management across a diverse suite of solutions.
Speaker #3: We also helped clients navigate change and achieve better outcomes with a breadth of retirement solutions, including the launch of our innovative Social Security Analyzer tool.
Rob Sharps: We also helped clients navigate change and achieve better outcomes with a breadth of retirement solutions, including the launch of our innovative Social Security Analyzer tool. We grew our active ETF business with the recent launch of 2 new active core ETFs, one focused on the US and one on international. These active core strategies combine quantitative and fundamental research for alpha generation, and we believe this approach will compete effectively with passive. We also expanded our fixed income ETF range with 3 new muni strategies and one multi-sector ETF. All told, we launched 13 ETFs in 2025, bringing our total to 30, and we grew assets under management to over $21 billion at year-end. We continued to expand our alternatives business. At the start of January 2026, we had the first close for a T. Rowe Price managed private equity fund.
Robert W. Sharps: We also helped clients navigate change and achieve better outcomes with a breadth of retirement solutions, including the launch of our innovative Social Security Analyzer tool. We grew our active ETF business with the recent launch of 2 new active core ETFs, one focused on the US and one on international. These active core strategies combine quantitative and fundamental research for alpha generation, and we believe this approach will compete effectively with passive. We also expanded our fixed income ETF range with 3 new muni strategies and one multi-sector ETF. All told, we launched 13 ETFs in 2025, bringing our total to 30, and we grew assets under management to over $21 billion at year-end. We continued to expand our alternatives business. At the start of January 2026, we had the first close for a T. Rowe Price managed private equity fund.
Speaker #3: We grew our active ETF business with a recent launch of two new active core ETFs—one focused on the U.S. and one on international.
Speaker #3: These active core strategies combined quantitative and fundamental research for alpha generation, and we believe this approach will compete effectively with passive. We also expanded our fixed income ETF range with three new muni strategies and one multi-sector ETF.
Speaker #3: All told, we launched 13 ETFs in 2025, bringing our total to 30, and we grew assets under management to over $21 billion at year-end.
Speaker #3: We continued to expand our alternatives business. At the start of January 2026, we had the first close for a T ROWE price-managed private equity fund.
Speaker #3: This strategy is a closed-end drawdown fund and seeks to create a portfolio of approximately 25 category-leading private companies. T. Rowe Price has exceptional access to late-stage private companies given our successful 18-year track record of investing over $24 billion across approximately 300 private companies.
Rob Sharps: This strategy is a closed-end drawdown fund and seeks to create a portfolio of approximately 25 category-leading private companies. T. Rowe Price has exceptional access to late-stage private companies, given our successful 18-year track record of investing over $24 billion across approximately 300 private companies, and our reputation for being thoughtful, long-term, and value-added shareholders well beyond the IPO. OHA enjoyed a second consecutive record fundraising year, with over $16 billion of capital raising across the platform, led by private lending strategies. Private credit deployment experienced a strong finish to the year, reflecting increased sponsor activity. Looking ahead, there continues to be an expectation of an acceleration in deal volume as the pipeline of pending private credit transactions remains robust.
Robert W. Sharps: This strategy is a closed-end drawdown fund and seeks to create a portfolio of approximately 25 category-leading private companies. T. Rowe Price has exceptional access to late-stage private companies, given our successful 18-year track record of investing over $24 billion across approximately 300 private companies, and our reputation for being thoughtful, long-term, and value-added shareholders well beyond the IPO. OHA enjoyed a second consecutive record fundraising year, with over $16 billion of capital raising across the platform, led by private lending strategies. Private credit deployment experienced a strong finish to the year, reflecting increased sponsor activity. Looking ahead, there continues to be an expectation of an acceleration in deal volume as the pipeline of pending private credit transactions remains robust.
Speaker #3: And our reputation for being thoughtful, long-term, and value-added shareholders well beyond the IPO. OHA enjoyed a second consecutive record fundraising year, with over 16 billion of capital raising across the platform, led by private lending strategies.
Speaker #3: Private credit deployment experienced a strong finish to the year, reflecting increased sponsor activity and looking ahead their continues to be an expectation of an acceleration in deal volume as the pipeline of pending private credit transactions remains robust.
Speaker #3: We made key organizational changes. Including the creation of the technology data and operations function to focus on integrating digital capabilities data strategy, and enterprise operations to accelerate execution, and the global strategy function to sharpen our strategic vision integrate corporate development and product strategy, and support our growth agenda.
Rob Sharps: We made key organizational changes, including the creation of the technology, data, and operations function, to focus on integrating digital capabilities, data strategy, and enterprise operations to accelerate execution, and the global strategy function to sharpen our strategic vision, integrate corporate development and product strategy, and support our growth agenda. We advanced our use of artificial intelligence across the firm, amplifying our investment professionals' capabilities without replacing their judgment, improving the speed and personalization of client service, and adopting new technologies with disciplined governance and thoughtful onboarding. The momentum we built in 2025 carried into 2026, with our announcement in January of a new strategic partnership with First Abu Dhabi Bank. Leveraging our collective strengths and capabilities, our partnership with FAB aims to deliver world-class investment solutions across public and private markets, tailored to meet the needs of investors throughout the Middle East. Wait.
Robert W. Sharps: We made key organizational changes, including the creation of the technology, data, and operations function, to focus on integrating digital capabilities, data strategy, and enterprise operations to accelerate execution, and the global strategy function to sharpen our strategic vision, integrate corporate development and product strategy, and support our growth agenda. We advanced our use of artificial intelligence across the firm, amplifying our investment professionals' capabilities without replacing their judgment, improving the speed and personalization of client service, and adopting new technologies with disciplined governance and thoughtful onboarding. The momentum we built in 2025 carried into 2026, with our announcement in January of a new strategic partnership with First Abu Dhabi Bank. Leveraging our collective strengths and capabilities, our partnership with FAB aims to deliver world-class investment solutions across public and private markets, tailored to meet the needs of investors throughout the Middle East. Wait.
Speaker #3: We advanced our use of artificial intelligence across the firm, amplifying our investment professionals' capabilities without replacing their judgment. We're improving the speed and personalization of client service, and adopting new technologies with disciplined governance and thoughtful onboarding.
Speaker #3: The momentum we built in 2025 carried into 2026 with our announcement in January of a new strategic partnership with First Abu Dhabi Bank. Leveraging our collective strengths and capabilities, our partnership with FAB aims to deliver world-class investment solutions across public and private markets, tailored to meet the needs of investors throughout the Middle East.
Speaker #3: While we have had an institutional business in the Middle East for some time, this is our first strategic partnership in the region, and it reflects our commitment to growing and diversifying our business through innovative global partnerships.
Rob Sharps: While we have had an institutional business in the Middle East for some time, this is our first strategic partnership in the region, and it reflects our commitment to growing and diversifying our business through innovative global partnerships. This partnership, and all the progress we made in 2025, is a reflection of our associates' steadfast commitment to our clients, and I want to thank each of them for their dedication. And now, Jen will share an update on our financial results.
Robert W. Sharps: While we have had an institutional business in the Middle East for some time, this is our first strategic partnership in the region, and it reflects our commitment to growing and diversifying our business through innovative global partnerships. This partnership, and all the progress we made in 2025, is a reflection of our associates' steadfast commitment to our clients, and I want to thank each of them for their dedication. And now, Jen will share an update on our financial results.
Speaker #3: This partnership and all the progress we made in 2025 is a reflection of our associates' steadfast commitment to our clients, and I want to thank each of them for their dedication.
Speaker #3: And now, Jen will share an update on our financial results.
Speaker #2: Thank you, Rob. And hello, everyone. I'll review our financial results before opening the line for Q&A. Our adjusted diluted earnings per share for Q4 2025 was adjusted diluted EPS to $9.72, which is $2.44, bringing full-year up 4.2% from 2024 on higher average AUM, investment advisory revenue, and lower average share count.
Jen Dardis: Thank you, Rob, and hello, everyone. I'll review our financial results before opening the line for Q&A. Our adjusted diluted earnings per share for Q4 2025 was $2.44, bringing full-year adjusted diluted EPS to $9.72, which is up 4.2% from 2024 on higher average AUM, investment advisory revenue, and lower average share count. As previously reported, we had $25.5 billion in net outflows in Q4, bringing the full year to $56.9 billion. As Rob noted, in 2025, we experienced elevated redemptions from our legacy equity and mutual fund business. Despite these redemptions, strong equity market returns more than offset the net outflows, and we ended the year with nearly $50 billion in additional equity assets under management.
Jennifer B. Dardis: Thank you, Rob, and hello, everyone. I'll review our financial results before opening the line for Q&A. Our adjusted diluted earnings per share for Q4 2025 was $2.44, bringing full-year adjusted diluted EPS to $9.72, which is up 4.2% from 2024 on higher average AUM, investment advisory revenue, and lower average share count. As previously reported, we had $25.5 billion in net outflows in Q4, bringing the full year to $56.9 billion. As Rob noted, in 2025, we experienced elevated redemptions from our legacy equity and mutual fund business. Despite these redemptions, strong equity market returns more than offset the net outflows, and we ended the year with nearly $50 billion in additional equity assets under management.
Speaker #2: As previously reported, we had 25.5 billion in net outflows in Q4, bringing the full year to $56.9 billion. As Rob noted, in 2025, we experienced elevated redemptions from our legacy equity and mutual fund business.
Speaker #2: Despite these redemptions, strong equity market returns more than offset the net outflows, and we ended the year with nearly $50 billion in additional equity assets under management.
Speaker #2: This trend, where equity market appreciation has exceeded equity net past three years. We saw encouraging momentum and signs of strength this quarter, and in a few areas of our outflows, has been consistent over the business, we ended the year with positive net flows.
Jen Dardis: This trend, where equity market appreciation has exceeded equity net outflows, has been consistent over the past three years. We saw encouraging momentum and signs of strength this quarter, and in a few areas of our business, we ended the year with positive net flows. Fixed income and alternatives had positive net flows for the quarter, and along with multi-asset, had positive net flows for the full year. Fixed income has now delivered eight consecutive quarters of positive net flows, and our target date franchise ended the year with net inflows of $5.2 billion. Our ETF business remains strong, with $1.8 billion in net inflows during the quarter. This brings 2025 net inflows to nearly $10.5 billion.
Jennifer B. Dardis: This trend, where equity market appreciation has exceeded equity net outflows, has been consistent over the past three years. We saw encouraging momentum and signs of strength this quarter, and in a few areas of our business, we ended the year with positive net flows. Fixed income and alternatives had positive net flows for the quarter, and along with multi-asset, had positive net flows for the full year. Fixed income has now delivered eight consecutive quarters of positive net flows, and our target date franchise ended the year with net inflows of $5.2 billion. Our ETF business remains strong, with $1.8 billion in net inflows during the quarter. This brings 2025 net inflows to nearly $10.5 billion.
Speaker #2: Fixed income and alternatives had positive net flows for the quarter, and along with multi-asset, had positive net flows for the full year. Fixed income has now delivered eight consecutive quarters of positive net flows.
Speaker #2: And our target date franchise ended the year with net inflows of $5.2 billion. Our ETF business remains strong, with $1.8 billion in net inflows during the quarter.
Speaker #2: This brings 2025 net inflows to nearly $10.5 billion, within other investment vehicles for the full year, trusts continue to see strong net inflows in the DC channel, and we saw positive net flows to SMAs.
Jen Dardis: Within other investment vehicles for the full year, trusts continued to see strong net inflows in the DC channel, and we saw positive net flows to SMAs. In 2025, strong equity markets lifted the growth of our average AUM, increasing our investment advisory fees, net revenues, and diluted EPS over the prior year. Our Q4 adjusted net revenue of $1.9 billion raised our full-year adjusted net revenue to nearly $7.4 billion, an increase of 2.8% from 2024. Our Q4 investment advisory revenue of $1.7 billion increased 2.3% from the prior quarter and 4.2% from Q4 2024, driven by higher average AUM and partially offset by a lower effective fee rate.
Jennifer B. Dardis: Within other investment vehicles for the full year, trusts continued to see strong net inflows in the DC channel, and we saw positive net flows to SMAs. In 2025, strong equity markets lifted the growth of our average AUM, increasing our investment advisory fees, net revenues, and diluted EPS over the prior year. Our Q4 adjusted net revenue of $1.9 billion raised our full-year adjusted net revenue to nearly $7.4 billion, an increase of 2.8% from 2024. Our Q4 investment advisory revenue of $1.7 billion increased 2.3% from the prior quarter and 4.2% from Q4 2024, driven by higher average AUM and partially offset by a lower effective fee rate.
Speaker #2: In 2025, strong equity markets lifted the growth of our average AUM, increasing our investment advisory fees, net revenues, and diluted EPS over the prior year.
Speaker #2: Our Q4 adjusted net revenue of $1.9 billion raised our full-year adjusted net revenue to nearly $7.4 billion, an increase of 2.8% from 2024. Our Q4 investment advisory revenue of $1.7 billion increased 2.3% from the prior quarter, and 4.2% from Q4 2024, driven by higher average AUM and partially offset by a lower effective fee rate.
Speaker #2: Our full-year investment advisory revenues of $6.6 billion were up 3.1% from the prior year. Our Q4 annualized effective fee rate excluding performance-based fees was 38.8 basis points, which is down from 39.1 basis points in Q3 2025.
Jen Dardis: Our full-year investment advisory revenues of $6.6 billion were up 3.1% from the prior year. Our Q4 annualized effective fee rate, excluding performance-based fees, was 38.8 basis points, which is down from 39.1 basis points in Q3 2025. The decline in average effective fee rate continues to be driven by changes in our asset and vehicle mix. As client demand increasingly shifts toward lower-priced vehicles and strategies, we remain focused on delivering our investment strategies in our clients' vehicles of choice while maintaining competitive fee rates. Slide 19 in the supplement illustrates the changes in our vehicle mix over the past 5 years.
Jennifer B. Dardis: Our full-year investment advisory revenues of $6.6 billion were up 3.1% from the prior year. Our Q4 annualized effective fee rate, excluding performance-based fees, was 38.8 basis points, which is down from 39.1 basis points in Q3 2025. The decline in average effective fee rate continues to be driven by changes in our asset and vehicle mix. As client demand increasingly shifts toward lower-priced vehicles and strategies, we remain focused on delivering our investment strategies in our clients' vehicles of choice while maintaining competitive fee rates. Slide 19 in the supplement illustrates the changes in our vehicle mix over the past 5 years.
Speaker #2: The decline in average effective fee rate continues to be driven by changes in our asset and vehicle mix. As client demand increasingly shifts toward lower-priced vehicles and strategies, we remain focused on delivering our investment strategies in our clients' vehicles of choice, while maintaining competitive fee rates.
Speaker #2: Slide 19 in the supplement illustrates the changes in our vehicle mix over the past five years. Over time, we've seen a growing proportion of our gross sales going to fixed income and multi-asset, and to lower-priced vehicles like ETFs, trusts, and SMAs, while redemptions remain primarily concentrated in higher-priced equity strategies and mutual funds.
Jen Dardis: Over time, we've seen a growing proportion of our growth sales going to fixed income and multi-asset, and to lower-priced vehicles like ETFs, trusts, and SMAs, while redemptions remain primarily concentrated in higher-priced equity strategies and mutual funds. These sales and redemption patterns drive the change in our asset and vehicle mix. Performance-based fees in Q4 of $14.2 million were predominantly from alternative strategies and were up from the prior quarter, but down from Q4 2024. Full-year performance-based fees of $37.4 million were down from 2024's $59.3 million.
Jennifer B. Dardis: Over time, we've seen a growing proportion of our growth sales going to fixed income and multi-asset, and to lower-priced vehicles like ETFs, trusts, and SMAs, while redemptions remain primarily concentrated in higher-priced equity strategies and mutual funds. These sales and redemption patterns drive the change in our asset and vehicle mix. Performance-based fees in Q4 of $14.2 million were predominantly from alternative strategies and were up from the prior quarter, but down from Q4 2024. Full-year performance-based fees of $37.4 million were down from 2024's $59.3 million.
Speaker #2: These sales and redemption patterns drive the change in our asset and vehicle mix. Performance-based fees in Q4 of 14.2 million were predominantly from alternative strategies and were up from the prior quarter, but down from Q4 2024.
Speaker #2: Full-year performance-based fees of 37.4 million were down from 2024's 59.3 million. Turning to expenses, Q4 adjusted operating expenses were $1.2 billion, bringing 2025 adjusted operating expenses, excluding carried interest expense, to $4.6 billion, which is up 3.4% from 2024's 4.46 billion.
Jen Dardis: Turning to expenses, Q4 adjusted operating expenses were $1.2 billion, bringing 2025 adjusted operating expenses, excluding carried interest expense, to $4.6 billion, which is up 3.4% from 2024's $4.46 billion, and within the previously provided guidance of 2% to 4%. Based on normal market conditions and assets at the end of 2025, we anticipate 2026 adjusted operating expenses, excluding carried interest expense, will be up 3% to 6% over 2025's $4.6 billion. This range includes our ongoing expense management program that allows us to continue investing in growth areas of the market. We remain committed to maintaining a strong cash position and returning capital to stockholders.
Jennifer B. Dardis: Turning to expenses, Q4 adjusted operating expenses were $1.2 billion, bringing 2025 adjusted operating expenses, excluding carried interest expense, to $4.6 billion, which is up 3.4% from 2024's $4.46 billion, and within the previously provided guidance of 2% to 4%. Based on normal market conditions and assets at the end of 2025, we anticipate 2026 adjusted operating expenses, excluding carried interest expense, will be up 3% to 6% over 2025's $4.6 billion. This range includes our ongoing expense management program that allows us to continue investing in growth areas of the market. We remain committed to maintaining a strong cash position and returning capital to stockholders.
Speaker #2: And within the previously provided guidance of 2 to 4%. Based on normal market conditions and assets at the end of 2025, we anticipate 2026 adjusted operating expenses, excluding carried interest expense, will be up 3 to 6% over 2025's 4.6 billion.
Speaker #2: This range includes our ongoing expense management program that allows us to continue investing in growth areas of the market. We remain committed to maintaining a strong cash position and returning capital to stockholders.
Speaker #2: During Q4, we bought back 141 million worth of shares. Bringing buybacks for 2025 to 624.6 million, or 2.8% of our shares outstanding. We closed the year with a strong balance sheet, holding $3.8 billion of cash and discretionary investments, up 735 million from the start of the year.
Jen Dardis: During Q4, we bought back $141 million worth of shares, bringing buybacks for 2025 to $624.6 million, or 2.8% of our shares outstanding. We closed the year with a strong balance sheet, holding $3.8 billion of cash and discretionary investments, up $735 million from the start of the year. This allows us to support our recurring dividend while preserving the ability to pursue opportunistic acquisitions, or partnerships, and execute share buybacks. Our long-term approach to managing our business enables us to invest strategically in areas that strengthen our capabilities and drive meaningful results for our clients. Combined with our continued focus on prudent expense oversight, we remain well-positioned to navigate changing market cycles and evolving trends. And now, we will open the line for Q&A.
Jennifer B. Dardis: During Q4, we bought back $141 million worth of shares, bringing buybacks for 2025 to $624.6 million, or 2.8% of our shares outstanding. We closed the year with a strong balance sheet, holding $3.8 billion of cash and discretionary investments, up $735 million from the start of the year. This allows us to support our recurring dividend while preserving the ability to pursue opportunistic acquisitions, or partnerships, and execute share buybacks. Our long-term approach to managing our business enables us to invest strategically in areas that strengthen our capabilities and drive meaningful results for our clients. Combined with our continued focus on prudent expense oversight, we remain well-positioned to navigate changing market cycles and evolving trends. And now, we will open the line for Q&A.
Speaker #2: This allows us to support our recurring dividend while preserving the ability to pursue opportunistic acquisitions or partnerships and execute share buybacks. Our long-term approach to managing our business enables us to invest strategically in areas that strengthen our capabilities and drive meaningful results for our clients.
Speaker #2: Combined with our continued focus on prudent expense oversight, we remain well-positioned to navigate changing market cycles and evolving trends. And now, we will open the line for
Speaker #2: Combined with our continued focus on prudent expense oversight, we remain well-positioned to navigate changing market cycles and evolving trends. And now, we will open the line for Q&A.
Speaker #1: To ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.
Operator: To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourselves to one question. If you have any additional questions, you may rejoin the queue. Please stand by while we compile the Q&A roster. Our first question comes from Alexander Blostein with Goldman Sachs. Your line is open.
Operator: To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourselves to one question. If you have any additional questions, you may rejoin the queue. Please stand by while we compile the Q&A roster. Our first question comes from Alexander Blostein with Goldman Sachs. Your line is open.
Speaker #1: In the interest of time, we ask that you please limit yourself to one question. If you have any additional questions, you may rejoin the queue.
Speaker #1: Please stand by while we compile the Q&A roster. Our first question comes from Alexander Blosne with Goldman Sachs. Your line is open.
Alexander Blostein: Good morning. Thank you for the question. So maybe starting with just a question around how you guys are planning from an operating perspective for 2026. Heard this expense guide, so maybe just remind us the ability to flex up or down in the event of the environment for equities is maybe flattish for the year. I just want to understand the key assumptions there. And then, you know, bigger picture, when you guys zoom out, obviously, the overall margins remain relatively healthy, but below where you guys have been in the past with prospects of organic basic growth, you know, still somewhat challenged. How do you guys think about the margins for T. Rowe Price in totality, kind of over the medium term, over the next couple of years?
Speaker #2: Good morning. Thank you for the question. So maybe starting with just a question around how you guys are planning from an operating perspective for 2026.
Alexander Blostein: Good morning. Thank you for the question. So maybe starting with just a question around how you guys are planning from an operating perspective for 2026. Heard this expense guide, so maybe just remind us the ability to flex up or down in the event of the environment for equities is maybe flattish for the year. I just want to understand the key assumptions there. And then, you know, bigger picture, when you guys zoom out, obviously, the overall margins remain relatively healthy, but below where you guys have been in the past with prospects of organic basic growth, you know, still somewhat challenged. How do you guys think about the margins for T. Rowe Price in totality, kind of over the medium term, over the next couple of years?
Speaker #2: Heard this expense guide, so maybe just remind us the ability to flex up or down in the event the environment for equities is maybe flattish for the year.
Speaker #2: Just want to understand the key assumptions there. And then, a bigger picture—when you guys zoom out, obviously the overall margins remain relatively healthy, but below where you guys have been in the past, with prospects of organic base fee growth still somewhat challenged.
Speaker #2: How do you guys think about the margins for to your price in totality? Kind of over the medium term, over the next couple of years?
Speaker #3: Yeah, Alex, thank you for the question. The biggest factor in any single year on our operating margin is equity market return. As we've discussed in the past, there's a portion of our expense base, about a third of it, that's variable.
Rob Sharps: Yeah, Alex, thank you for the question. The biggest factor in any single year on our operating margin is equity market return. As we've discussed in the past, there's a portion of our expense base, about 1/3 of it, that's variable, but the biggest driver of our revenue is equity market returns. That said, you know, we understand the dynamic of the revenue outlook with regard to flow and fee pressure, and we're gonna need to balance going forward in investing to position ourselves for success long term and ensuring that we have world-class talent with a commitment to being a highly efficient organization with an ongoing focus on productivity. So we have a number of initiatives to drive cost savings to fund those investments.
Robert W. Sharps: Yeah, Alex, thank you for the question. The biggest factor in any single year on our operating margin is equity market return. As we've discussed in the past, there's a portion of our expense base, about 1/3 of it, that's variable, but the biggest driver of our revenue is equity market returns. That said, you know, we understand the dynamic of the revenue outlook with regard to flow and fee pressure, and we're gonna need to balance going forward in investing to position ourselves for success long term and ensuring that we have world-class talent with a commitment to being a highly efficient organization with an ongoing focus on productivity. So we have a number of initiatives to drive cost savings to fund those investments.
Speaker #3: But the biggest driver of our revenue is equity market returns. That said, we understand the dynamic of the revenue outlook with regard to flow and fee pressure.
Speaker #3: And we're going to need to balance going forward—investing to position ourselves for success long-term and ensuring that we have world-class talent, with a commitment to being a highly efficient organization with an ongoing focus on productivity.
Speaker #3: So we have a number of initiatives to drive cost savings, to fund those investments. But I'm really not going to comment on what I think the margin profile will look like over time because as I said, the market return has such a significant influence on
Speaker #3: So we have a number of initiatives to drive cost savings, to fund those investments. But I'm really not going to comment on what I think the margin profile will look like over time because as I said, the market return has such a significant influence on that.
Rob Sharps: But, you know, I'm really not gonna comment on what I think the margin profile will look like over time, because, you know, as I said, you know, the market return has such a significant influence on that.
Robert W. Sharps: But, you know, I'm really not gonna comment on what I think the margin profile will look like over time, because, you know, as I said, you know, the market return has such a significant influence on that.
Speaker #4: And maybe if I can talk specifically about expenses and the guide for 2026—we had talked last time about the two-thirds of our controllable expenses that we were managing toward low single-digit growth.
Jen Dardis: Maybe if I can talk specifically about expenses and the guide for 2026. We had talked last time about the two-thirds of our controllable expenses that we were managing toward low single-digit growth. That's included in this plan, and as Rob mentioned, that's a balance of cost savings efforts and also earmarking funds to be able to invest in some of our growth areas, new vehicles such as ETFs, SMAs, models, in alternatives and in our partnerships where we're introducing new products, and also in things like advice. Then if you look at our market-driven expenses, that's what's driving it slightly higher into the range, and it's really two big drivers there. One is on what we call distribution expenses. That's things like 12b-1, trailer fees, or revenue share.
Jennifer B. Dardis: Maybe if I can talk specifically about expenses and the guide for 2026. We had talked last time about the two-thirds of our controllable expenses that we were managing toward low single-digit growth. That's included in this plan, and as Rob mentioned, that's a balance of cost savings efforts and also earmarking funds to be able to invest in some of our growth areas, new vehicles such as ETFs, SMAs, models, in alternatives and in our partnerships where we're introducing new products, and also in things like advice. Then if you look at our market-driven expenses, that's what's driving it slightly higher into the range, and it's really two big drivers there. One is on what we call distribution expenses. That's things like 12b-1, trailer fees, or revenue share.
Speaker #4: That's included in this plan. And as Rob mentioned, that's a balance of cost savings, efforts, and also earmarking funds to be able to invest in some of our growth areas—new vehicles such as ETFs, SMAs, and models.
Speaker #4: In alternatives and in our partnerships where we're introducing new products, and also in things like advice. And then, if you look at our market-driven expenses, that's what's driving it slightly higher into the range.
Speaker #4: And it's really two big drivers there. One is on what we call distribution expenses. That's things like 12B1, trailer fees, or revenue share. Those increase with assets under management as opposed to revenue.
Jen Dardis: Those increase with assets under management as opposed to revenue, and we saw tailwinds in growth in AUM at the end of the year, and we have our normal market growth assumptions, kind of moderate equity market growth in 2026, as well as modest fixed income growth. The second thing that's within there is our year-end compensation. Again, that generally runs with revenue, but there are some accounting implications from our LTI program that are driving that a little higher this year.
Jennifer B. Dardis: Those increase with assets under management as opposed to revenue, and we saw tailwinds in growth in AUM at the end of the year, and we have our normal market growth assumptions, kind of moderate equity market growth in 2026, as well as modest fixed income growth. The second thing that's within there is our year-end compensation. Again, that generally runs with revenue, but there are some accounting implications from our LTI program that are driving that a little higher this year.
Speaker #4: And we saw a tailwinds in growth in AUM at the end of the year. And we have our normal market growth assumptions kind of moderate equity market growth in 2026 as well as modest fixed income growth.
Speaker #4: The second thing that's within there is our year-end compensation. And again, that generally runs with revenue, but there are some accounting implications from our LTI program that are driving that a little higher this
Speaker #4: year. Thank you.
Operator: Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is open.
Operator: Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is open.
Speaker #1: Our next question comes from Michael Cypress with Morgan Stanley. Your line is open.
Speaker #1: open. Hey, good morning.
Michael Cyprys: Hey, good morning. Thanks for taking the question. More of a longer-term question for you, just on, on tokenization. Just curious if you could just talk a little bit about how you're experimenting with tokenization and blockchain. Where do you see some of the most compelling use cases and value to be unlocked? And curious how you see this all playing out over the next 12 to 24 months versus longer term, and where might there be scope for differentiation?
Michael Cyprys: Hey, good morning. Thanks for taking the question. More of a longer-term question for you, just on, on tokenization. Just curious if you could just talk a little bit about how you're experimenting with tokenization and blockchain. Where do you see some of the most compelling use cases and value to be unlocked? And curious how you see this all playing out over the next 12 to 24 months versus longer term, and where might there be scope for differentiation?
Speaker #5: Thanks for taking the question. More of a longer-term question for you, just on tokenization. Just curious if you could talk a little bit about how you're experimenting with tokenization and blockchain.
Speaker #5: Where do you see some of the most compelling use cases and value to be unlocked? And curious how you see this all playing out over the next 12, 24 months versus longer term and where might there be scope for differentiation?
Speaker #3: Yeah, hi, Michael. It's Eric I'll take that one. We're, first of all, we've been investing in our digitization capabilities going back to '22 when we first brought on a team and built it out internally to develop expertise in this area.
Eric Veiel: Yeah. Hi, Michael. It's Eric. I'll take, I'll take that one. You know, we're... First of all, we've been investing in our digitization capabilities, going back to 2022, when we first, you know, brought on a team and have built it out internally to develop expertise in this area. We think about it along three different vectors. First, there's an efficiency opportunity within tokenization for middle and back office savings that I think could be consequential in time. There's a product opportunity. As you move more traditional finance assets on chain, you open up opportunity to accelerate some of the trends that we're seeing, whether that's the convergence of public and privates, whether it's fractionalization or mass customization. And then there's a distribution opportunity. It opens up a new generation of investors who are native to mobile and crypto.
Eric Veiel: Yeah. Hi, Michael. It's Eric. I'll take, I'll take that one. You know, we're... First of all, we've been investing in our digitization capabilities, going back to 2022, when we first, you know, brought on a team and have built it out internally to develop expertise in this area. We think about it along three different vectors. First, there's an efficiency opportunity within tokenization for middle and back office savings that I think could be consequential in time. There's a product opportunity. As you move more traditional finance assets on chain, you open up opportunity to accelerate some of the trends that we're seeing, whether that's the convergence of public and privates, whether it's fractionalization or mass customization. And then there's a distribution opportunity. It opens up a new generation of investors who are native to mobile and crypto.
Speaker #3: We think about it along three different vectors. First, there's an efficiency opportunity within tokenization for middle and back-office savings that I think could be consequential in time.
Speaker #3: There's a product opportunity. As you move more traditional finance assets on-chain, you open up opportunity to accelerate some of the trends that we're seeing, whether that's the convergence of public and privates, whether it's fractionalization or mass customization.
Speaker #3: And then there's a distribution opportunity. It opens up a new generation of investors who are native to mobile and crypto. We're working on all three of those.
Eric Veiel: We're working on all three of those. I would say on the efficiency front, within investments, we're doing a lot of work on end-to-end processes that we think will really impact over time from a cost savings perspective, our middle and back office, and potentially even some front office opportunity. On the product side, we've already talked about how we've registered with the SEC our active crypto ETF that we hope to have in market in 2026, that will use a blend of fundamental and quantitative analysis to bring a multi-token ETF to the market. And then on the distribution side, I think that's a more open opportunity for us, and we'll explore everything from partnerships to de novo builds.
Eric Veiel: We're working on all three of those. I would say on the efficiency front, within investments, we're doing a lot of work on end-to-end processes that we think will really impact over time from a cost savings perspective, our middle and back office, and potentially even some front office opportunity. On the product side, we've already talked about how we've registered with the SEC our active crypto ETF that we hope to have in market in 2026, that will use a blend of fundamental and quantitative analysis to bring a multi-token ETF to the market. And then on the distribution side, I think that's a more open opportunity for us, and we'll explore everything from partnerships to de novo builds.
Speaker #3: I would say on the efficiency front, within investments, we're doing a lot of work on end-to-end processes. That we think will really impact over time from a cost savings perspective, our middle and back-office, and potentially even some front-office opportunity.
Speaker #3: On the product side, we've already talked about how we've registered with the SEC, our active crypto ETF that we hope to have in market in '26.
Speaker #3: That we'll use a blend of fundamental and quantitative analysis to bring a multi-token ETF to the market. And then on the distribution side, I think that's a more open opportunity for us.
Speaker #3: And we'll explore everything from partnerships to de novo builds.
Speaker #1: Thank you. Our next question comes from Craig Siegenthaler with Bank of America. Your line is open.
Operator: ... Thank you. Our next question comes from Craig Siegenthaler with Bank of America. Your line is open.
Operator: Thank you. Our next question comes from Craig Siegenthaler with Bank of America. Your line is open.
Craig Siegenthaler: Good morning, everyone. My question is on the update on the potential migration of privates into the 401(k) channel. So, we should be getting the DOL update shortly, maybe not this month as planned, due to the government shutdown. But how do you think this plays out across the industry with single partnerships or multi-partner models? And also, where is T. Rowe Price now on the product launch front with your new Goldman Sachs partnership, which will also include some OHA and credit?
Craig Siegenthaler: Good morning, everyone. My question is on the update on the potential migration of privates into the 401(k) channel. So, we should be getting the DOL update shortly, maybe not this month as planned, due to the government shutdown. But how do you think this plays out across the industry with single partnerships or multi-partner models? And also, where is T. Rowe Price now on the product launch front with your new Goldman Sachs partnership, which will also include some OHA and credit?
Speaker #6: Good morning, everyone. My question is on the update on the potential migration of private into the foreign K channel. So we should be getting the DOL update shortly, maybe not this month as planned due to the government shutdown, but how do you think this plays out across the industry with single-partnership or multi-partner models?
Speaker #6: And also, where is TRO price now on the product launch front with your new Goldman Sachs partnership, which will also include some OHA and credit?
Speaker #6: And also, where is TRO price now on the product launch front with your new Goldman Sachs partnership, which will also include some OHA and credit?
Speaker #5: Yeah, Craig, thank you for the question. So not a lot new since we've commented on this in the last few calls. Our multi-asset team has really researched the investment case for including private market alternatives in defined contribution solutions, including target date funds.
Rob Sharps: Yeah, Craig, thank you for the question. So not a lot new since we've commented on this in the last few calls. Our multi-asset team has really researched the investment case for including private market alternatives in defined contribution solutions, including target date funds, and they believe that the investment case is strong. That said, there is a mixed view among plan sponsors based on lack of clarity with regard to fiduciary risk and change, just, you know, kind of not only around fee, but also around liquidity. And, it's a dynamic ultimately, that we're going to need to navigate. As you said, DOL comments are due to come back from the OMB. There'll be a public comment period. We may not get real clarity on what the ultimate guidance looks like for several months.
Robert W. Sharps: Yeah, Craig, thank you for the question. So not a lot new since we've commented on this in the last few calls. Our multi-asset team has really researched the investment case for including private market alternatives in defined contribution solutions, including target date funds, and they believe that the investment case is strong. That said, there is a mixed view among plan sponsors based on lack of clarity with regard to fiduciary risk and change, just, you know, kind of not only around fee, but also around liquidity. And, it's a dynamic ultimately, that we're going to need to navigate. As you said, DOL comments are due to come back from the OMB. There'll be a public comment period. We may not get real clarity on what the ultimate guidance looks like for several months.
Speaker #5: And they believe that the investment case is strong. That said, there is a mixed view among plan sponsors based on lack of clarity with regard to fiduciary risk and change—not just kind of not only around fee, but also around liquidity.
Speaker #5: And it's a dynamic ultimately that we're going to need to navigate. As you said, the DOL comments are due to come back from the OMB.
Speaker #5: There'll be a public comment period. We may not get real clarity on what the ultimate guidance looks like for several months. What we want to do is have a flexible approach that's responsive to our clients' interests.
Rob Sharps: What we want to do is have a flexible approach that's responsive to our clients' interests. So with regard to the specific question about the Goldman Sachs T. Rowe Price retirement date offering, we continue to work on product design and plan to have the offering in market around mid-year, this year. We think there's a segment of the market that will be early adopters and, you know, kind of ultimately, you know, kind of feel that interest could grow. But, you know, my sense is that penetration of the overall opportunity set will evolve relatively slowly and won't be substantial for some period of time.
Robert W. Sharps: What we want to do is have a flexible approach that's responsive to our clients' interests. So with regard to the specific question about the Goldman Sachs T. Rowe Price retirement date offering, we continue to work on product design and plan to have the offering in market around mid-year, this year. We think there's a segment of the market that will be early adopters and, you know, kind of ultimately, you know, kind of feel that interest could grow. But, you know, my sense is that penetration of the overall opportunity set will evolve relatively slowly and won't be substantial for some period of time.
Speaker #5: So with regard to the specific question about the Goldman Sachs TRO price, retirement date offering, we continue to work on product design and plan to have the offering in market in around mid-year this year.
Speaker #5: We think there's a segment of the market that will be early adopters and ultimately kind of feel that interest could grow. But my sense is that penetration of the overall opportunity set will evolve relatively slowly.
Speaker #5: And won't be substantial for some period of time.
Speaker #1: Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.
Operator: Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.
Operator: Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.
Dan Fannon: Thanks. Good morning. So wanted to talk about the target date business. You showed some outflows in the fourth quarter, something we haven't seen in a few years. So wanted to get a little bit more context around the momentum and/or outlook for that business as we think about 2026, whether that's the kind of backlog of, you know, kind of new win opportunities and/or losses that might be, you know, within the periphery as of now.
Speaker #7: Thanks. Good morning. So, I wanted to talk about the
Daniel Fannon: Thanks. Good morning. So wanted to talk about the target date business. You showed some outflows in the fourth quarter, something we haven't seen in a few years. So wanted to get a little bit more context around the momentum and/or outlook for that business as we think about 2026, whether that's the kind of backlog of, you know, kind of new win opportunities and/or losses that might be, you know, within the periphery as of now.
Speaker #1: The target date business . You showed some outflows in the fourth quarter . Something we haven't seen in a few years . So I wanted to get a context around the little bit more momentum and or outlook for that business .
Speaker #1: think about As we 2026 , whether few that's a years . So we wanted to a little bit more context momentum around the and or outlook for that business .
Speaker #1: As we think whether about 2026 , that's kind of backlog opportunities and or new new win that losses that might , kind of be within the periphery as now of .
Rob Sharps: Yeah, Dan, thanks for the question, and if I may, maybe I'll take the opportunity to zoom out and talk about flows more broadly and then drill down on the target date business. Well, flows in Q4 were meaningfully softer than we anticipated, especially in the month of December. The weakness was largely driven by equities, with particular pressure in growth equity portfolios, driven by a handful of institutional losses and some rebalancing, given the robust equity market returns in 2025. But as you cite, outflows in the retirement date funds, which are not necessarily unusual for the month of December, but are unusual for the full Q4, were also a factor.
Robert W. Sharps: Yeah, Dan, thanks for the question, and if I may, maybe I'll take the opportunity to zoom out and talk about flows more broadly and then drill down on the target date business. Well, flows in Q4 were meaningfully softer than we anticipated, especially in the month of December. The weakness was largely driven by equities, with particular pressure in growth equity portfolios, driven by a handful of institutional losses and some rebalancing, given the robust equity market returns in 2025. But as you cite, outflows in the retirement date funds, which are not necessarily unusual for the month of December, but are unusual for the full Q4, were also a factor.
Speaker #2: Dan , thanks Yeah . for the question . And may , maybe I'll take the opportunity to if I zoom about down broadly and target date flows more talk on the then drill in the fourth quarter business were flows meaningfully we softer than in the anticipated , month of especially .
Speaker #2: December was largely weakness driven by equities , with particular pressure in growth equity portfolios by a handful of driven institutional losses and some rebalancing .
Speaker #2: the Given robust equity market returns in 2025 . But as you cite outflows in the retirement date , funds , which are not necessarily unusual for the month of but are December , unusual for the full fourth quarter , we're a also factor about a Q4 third of the date .
Rob Sharps: About 1/3 of the Q4 target date outflows were driven by M&A activity, where our client was acquired and the plans were consolidated, and we ended up losing the mandate. We also lost a handful of lumpy or larger mandates that weren't M&A related. But if you look at the broader trend, I think what you see is that fully active target date funds are losing share to passive and blend. Given our position as the largest fully active target date fund manager, that's going to be a headwind for us. On the positive side, I think we're really well positioned to mitigate or offset that headwind with our very strong blend and hybrid offerings, which incorporate a component of passive. The blend area is the fastest growing category within target date. It's actually growing faster than passive, and T.
Robert W. Sharps: About 1/3 of the Q4 target date outflows were driven by M&A activity, where our client was acquired and the plans were consolidated, and we ended up losing the mandate. We also lost a handful of lumpy or larger mandates that weren't M&A related. But if you look at the broader trend, I think what you see is that fully active target date funds are losing share to passive and blend. Given our position as the largest fully active target date fund manager, that's going to be a headwind for us. On the positive side, I think we're really well positioned to mitigate or offset that headwind with our very strong blend and hybrid offerings, which incorporate a component of passive.
Speaker #2: Outflows by M&A were activity , retirement where our was client acquired and the plans were consolidated , we and ended up losing the mandate .
Speaker #2: We also lost of a lumpy or handful mandates that weren't M&A related , but if you at the look trend , I think what you see is that fully target active date funds are losing share to passive in blend .
Speaker #2: position as Given our the largest fully active target date fund manager , that's going to be a headwind for . On the positive us side , I think we're really well positioned to to mitigate or offset that headwind with our very strong blend and hybrid incorporate offerings , which a component of passive the the area is blend fastest growing within category target date .
Robert W. Sharps: The blend area is the fastest growing category within target date. It's actually growing faster than passive, and T. Rowe Price is gaining market share in the blend category. So we believe that we'll continue to grow our retirement date franchise going forward. Whether or not that growth is consistent with the levels that it's been in the past, I think to some extent will depend on the intensity of the shift away from active and our ability to capture a portion of that with our blend and hybrid offering, but also to grow and gain market share, you know, from a new dollar perspective within that category. Just as a more current data point, we did have $1.7 billion of target date inflows in the month of January. I also got to take the opportunity to share some perspective on the 2026 flow outlook.
Rob Sharps: Rowe Price is gaining market share in the blend category. So we believe that we'll continue to grow our retirement date franchise going forward. Whether or not that growth is consistent with the levels that it's been in the past, I think to some extent will depend on the intensity of the shift away from active and our ability to capture a portion of that with our blend and hybrid offering, but also to grow and gain market share, you know, from a new dollar perspective within that category. Just as a more current data point, we did have $1.7 billion of target date inflows in the month of January. I also got to take the opportunity to share some perspective on the 2026 flow outlook.
Speaker #2: It's actually growing than faster and T Rowe Price is gaining market share in the blend category . So we that we'll continue to grow our retirement date franchise forward .
Speaker #2: going Whether or not that growth is with the consistent levels that it's been in the past , I think to some extent will depend on the intensity of the shift away from active and our ability to capture a that portion of with our blend and hybrid offering , but also to grow and gain market from share new dollar perspective .
Speaker #2: that Within category . Just as a as current data a more point , we did have 1,000,000,007 of target date in inflows month of in the January .
Rob Sharps: You know, flows have been volatile and difficult for us to predict, but our base case reflects continued pressure in equities, partially offset by inflows in retirement date fund, and consistent with the previous comment, with a continued shift towards blend... steady growth in fixed income and accelerating growth in alternatives. The intensity of equity outflows is the biggest factor for our overall flows. To get back to positive flows, we need equity outflows to moderate. We're confident that that will happen over time with strong performance. In January, we did have just under $6 billion of outflows, but the pipeline suggests that the rest of the quarter, being February and March, has the potential to improve from those levels.
Robert W. Sharps: You know, flows have been volatile and difficult for us to predict, but our base case reflects continued pressure in equities, partially offset by inflows in retirement date fund, and consistent with the previous comment, with a continued shift towards blend... steady growth in fixed income and accelerating growth in alternatives. The intensity of equity outflows is the biggest factor for our overall flows. To get back to positive flows, we need equity outflows to moderate. We're confident that that will happen over time with strong performance. In January, we did have just under $6 billion of outflows, but the pipeline suggests that the rest of the quarter, being February and March, has the potential to improve from those levels.
Speaker #2: I'll also kind of take the opportunity to share some perspective on the 2026 flow outlook . Flows have been volatile and difficult predict for us to , but our base case reflects continued pressure in by retirement , partially offset equities date consistent with the previous continued a shift towards comment with blend growth in fixed , steady income and accelerating growth in alternatives , the intensity of equity outflows biggest is the factor for flows to our back overall to positive get flows , we need equity outflows to .
Speaker #2: We're confident that moderate happen over time with strong performance in January , did have we just under $6 billion of outflows , but the pipeline suggests that the rest of the quarter being February and March , has the improve from those levels to .
Operator: Thank you. Our next question comes from Ben Budish with Barclays. Your line is open.
Operator: Thank you. Our next question comes from Ben Budish with Barclays. Your line is open.
Ben Budish: Hi, good morning, and thank you for taking the question. Maybe, Rob, just following up on that last point, I know, you know, the market had a bit of a shock just yesterday, and I would expect your comments are, you know, sort of higher level thinking over the course of the year. But just curious, you know, how would you expect that sort of impact to translate to, you know, near-term equity flows? You know, how do advisors and retail customers tend to respond to that sort of disruption? And could you maybe talk about, you know, the sort of mix across the equity franchise?
Benjamin Budish: Hi, good morning, and thank you for taking the question. Maybe, Rob, just following up on that last point, I know, you know, the market had a bit of a shock just yesterday, and I would expect your comments are, you know, sort of higher level thinking over the course of the year. But just curious, you know, how would you expect that sort of impact to translate to, you know, near-term equity flows? You know, how do advisors and retail customers tend to respond to that sort of disruption? And could you maybe talk about, you know, the sort of mix across the equity franchise? You know, how exposed is the business to, you know, software and services and, you know, the areas which, you know, at least the market is sort of worrying maybe under some kind of, you know, near-term threat from AI development? Thank you.
Speaker #3: Thank you . next Our comes question from Budish Ben with is Barclays . Your open line .
Speaker #4: morning and Hi . Good thank you for taking the question . Maybe Rob , following up on that last just I know , you know , had a bit of the market a shock just yesterday , and I would expect comments are , you know , sort of your thinking over the course of the year .
Speaker #4: But just curious , would you expect that sort of impact to translate to near-term how flows ? equity You know , do and advisors retail to how customers tend to that sort of respond could you disruption ?
Ben Budish: You know, how exposed is the business to, you know, software and services and, you know, the areas which, you know, at least the market is sort of worrying maybe under some kind of, you know, near-term threat from AI development? Thank you.
Speaker #4: And about , you know , maybe talk mix across the franchise ? equity You exposed know , how business and to , you services .
Speaker #4: you know , the areas at which , you know , And , is sort least the of worrying under some threat from near-term kind of , maybe AI you .
Rob Sharps: Yeah, I'll start and welcome input from Eric and Jen, who I'm sure have a perspective on the topic. With regard to how equity market returns impact flows, it depends by client type. I think there are certain client types that tend to react more quickly, and other client types that, you know, have a commitment to the asset class and allocation framework that, you know, kind of in some instance, with the drawdown in the market, may actually be inclined to rebalance and add to equities. I would say the net effect to us over a period longer than days or weeks really isn't that substantial. Yeah, I think in the very short term, you may see a knee-jerk reaction to a sharp drawdown in the market in certain segments.
Robert W. Sharps: Yeah, I'll start and welcome input from Eric and Jen, who I'm sure have a perspective on the topic. With regard to how equity market returns impact flows, it depends by client type. I think there are certain client types that tend to react more quickly, and other client types that, you know, have a commitment to the asset class and allocation framework that, you know, kind of in some instance, with the drawdown in the market, may actually be inclined to rebalance and add to equities. I would say the net effect to us over a period longer than days or weeks really isn't that substantial. Yeah, I think in the very short term, you may see a knee-jerk reaction to a sharp drawdown in the market in certain segments.
Speaker #4: developments .
Speaker #2: Yeah . Thank start Eric and Jen , and welcome I'll who I'm sure have perspective a on the topic with regard how to equity market returns impact .
Speaker #2: depends by client It I type . think there are client certain types that quickly react more tend to other that client , and types have to the asset and and class that instances with framework kind of the the actually drawdown in market , may be to inclined rebalance and add to equities .
Speaker #2: I would say the net effect to us period allocation longer over a than weeks days or isn't that , really substantial . I think in the very short you may see a knee jerk reaction to a sharp in the market in certain segments , ultimately but a number of puts there are and And , you know , as I've said in my earlier despite comment , robust returns takes .
Rob Sharps: But, you know, ultimately, there are a number of puts and takes, and, you know, as I'd said in my earlier comment, despite robust market returns last year, that actually caused a bit of a drag as some of our clients rebalanced away from strategies that had significant absolute returns. So, and that, that's, again, I'd say not something that is a meaningful factor in our outlook from a flow perspective. In terms of our exposure to software and services, I'll ask Eric to offer his perspective. I think a lot of the consternation in the market is over some of the private equity sponsors having significant deals and exposure to PE firms.
Robert W. Sharps: But, you know, ultimately, there are a number of puts and takes, and, you know, as I'd said in my earlier comment, despite robust market returns last year, that actually caused a bit of a drag as some of our clients rebalanced away from strategies that had significant absolute returns. So, and that, that's, again, I'd say not something that is a meaningful factor in our outlook from a flow perspective. In terms of our exposure to software and services, I'll ask Eric to offer his perspective. I think a lot of the consternation in the market is over some of the private equity sponsors having significant deals and exposure to PE firms.
Speaker #2: last actually market year , that caused bit of a some of our clients drag as rebalanced drawdown away from strategies had that absolute significant .
Speaker #2: returns So that's that's say not that something is a again , I'd factor from a outlook in our flow meaningful perspective , in terms of our and software to services exposure .
Speaker #2: Eric to offer I'll ask his to a lot I think consternation in the market of the is Some over . equity sponsors having of the deals and private exposure significant to PE to firms a as , largely liquid public manager .
Rob Sharps: As an active, largely liquid public manager, where we have the ability to adapt and adjust to changing market environments, so our positioning can obviously be very fluid. You know, I would say that our overall mix is no more exposed than the market as a whole, but I'll ask Eric Veiel to give a little bit more specific commentary in terms of software exposure.
Robert W. Sharps: As an active, largely liquid public manager, where we have the ability to adapt and adjust to changing market environments, so our positioning can obviously be very fluid. You know, I would say that our overall mix is no more exposed than the market as a whole, but I'll ask Eric Veiel to give a little bit more specific commentary in terms of software exposure.
Speaker #2: We have ability to adjust market to environment . our the very obviously I would You know , say that be positioning can overall is is no more exposed than the a .
Eric Veiel: Sure. So, you know, with almost roughly $1 trillion in equity assets across a wide variety of different types of portfolios, we're obviously gonna have a lot of different types of mandates, with different types of exposure to software. As you think about what happened yesterday and the disruption risk of AI, specifically some very unique opportunities that were brought forward by Anthropic, we have been studying these opportunities and risks for a long time, and have very deep research on them, and have been positioned for events like this in many of our portfolios. That doesn't mean that in every portfolio, we're perfectly positioned for what happened in a single day of market action. But what happened yesterday, in terms of the potential disruption of AI across different parts of the software industry, is not a surprise to us.
Eric Veiel: Sure. So, you know, with almost roughly $1 trillion in equity assets across a wide variety of different types of portfolios, we're obviously gonna have a lot of different types of mandates, with different types of exposure to software. As you think about what happened yesterday and the disruption risk of AI, specifically some very unique opportunities that were brought forward by Anthropic, we have been studying these opportunities and risks for a long time, and have very deep research on them, and have been positioned for events like this in many of our portfolios. That doesn't mean that in every portfolio, we're perfectly positioned for what happened in a single day of market action. But what happened yesterday, in terms of the potential disruption of AI across different parts of the software industry, is not a surprise to us.
Speaker #2: But market as Eric to give a little bit I'll ask commentary in terms of more whole software Sure active . So , you know , with .
Speaker #2: Almost roughly exposure, $1 trillion in equity across assets, a wide mix. So, different types of variety going to different types of portfolios. We're specific—have a lot of mandates with exposure of different types of software.
Speaker #2: to about think what happened the disruption As you risk of AI , some very yesterday in unique opportunities that were brought forward by anthropic , specifically , we have these opportunities risks and for a studying time and very deep been long them and have been positioned for events like this .
Speaker #2: And our That that in doesn't mean every many of portfolio , we're perfectly for what in a single day of positioned market action .
Speaker #2: But what terms of the yesterday disruption potential happened different across parts of the AI happened software is not industry , a us in
Operator: Thank you. Our next question comes from Ken Worthington with J.P. Morgan. Your line is open.
Operator: Thank you. Our next question comes from Ken Worthington with J.P. Morgan. Your line is open.
Ken Worthington: Hi, good morning. Along those same lines, on the AI disruption, what is Oak Hill's exposure to investments potentially disrupted by AI? And ultimately, do you think the problems could be big enough in private credit to drive market share shifts? And where might T. Rowe fit into those share shifts, if they're big enough to, you know, discuss here today?
Kenneth Worthington: Hi, good morning. Along those same lines, on the AI disruption, what is Oak Hill's exposure to investments potentially disrupted by AI? And ultimately, do you think the problems could be big enough in private credit to drive market share shifts? And where might T. Rowe fit into those share shifts, if they're big enough to, you know, discuss here today?
Speaker #3: Thank you . Our next comes question from Ken Worthington with J.P. Morgan line is . The open
Speaker #3: .
Speaker #5: What is Oak Hills to investments potentially disrupted by AI, and do you think the exposure or problems could be big enough in private credit to ultimately drive the market?
Speaker #5: And where might Tyro fit into those share shifts? If they're big enough to, you know, discuss here today?
Speaker #5: And where might Tyro fit into those share shifts? If they're big enough to, you know, discuss here today? Surprise to
Rob Sharps: Yeah, look, I'm not gonna comment on OHA's underlying exposures. But what I will say is that they have an extraordinary rigorous credit process, and to the extent that we go into a credit environment where defaults are more prevalent, we think that OHA's process and performance will be a differentiating factor relative to the rest of the industry. And I might just take the opportunity to comment on OHA more broadly. OHA is doing well. They had a second consecutive year of record capital raising, with particular strength in private lending. The T. Rowe Price and OHA teams are working very well together on opportunities across wealth, insurance, and the broader institutional market. As a matter of fact, the T. Rowe Price...
Robert W. Sharps: Yeah, look, I'm not gonna comment on OHA's underlying exposures. But what I will say is that they have an extraordinary rigorous credit process, and to the extent that we go into a credit environment where defaults are more prevalent, we think that OHA's process and performance will be a differentiating factor relative to the rest of the industry. And I might just take the opportunity to comment on OHA more broadly. OHA is doing well. They had a second consecutive year of record capital raising, with particular strength in private lending. The T. Rowe Price and OHA teams are working very well together on opportunities across wealth, insurance, and the broader institutional market. As a matter of fact, the T. Rowe Price...
Speaker #6: I'm to comment on Oak underlying exposures , but what I will say is that they Yeah , look , have an extraordinary not going rigorous credit process .
Speaker #6: And industry And the just take opportunity I might to comment on OHA broadly more . OHA is doing well . They had a second consecutive of year record capital raising with particular strength in private lending .
Speaker #6: To the extent that we go into a credit environment where defaults are more prevalent, we think that OA's process and performance will be a differentiating factor relative to the rest of the market.
Speaker #6: The T Rowe Price in OHA are , teams working together on opportunities across wealth insurance and institutional market . As a matter of fact , T Rowe the Price client teams helped OHA bring bring in over institutional commitments $3 billion in new , with much of that in 2025 .
Rob Sharps: Client-facing teams helped OHA bring in over $3 billion in new institutional commitments, with much of that in 2025. As we'd referenced earlier, OHA is deeply involved in our collaboration with Goldman Sachs. Their private credit capabilities are designed into several of the investment strategies, including the co-branded Target Date Fund and multi-alts offering for wealth. We do plan to do a spotlight on OHA and our efforts in alternatives on one of the earnings calls later this year, and anticipate having Glenn August join us for that call.
Robert W. Sharps: Client-facing teams helped OHA bring in over $3 billion in new institutional commitments, with much of that in 2025. As we'd referenced earlier, OHA is deeply involved in our collaboration with Goldman Sachs. Their private credit capabilities are designed into several of the investment strategies, including the co-branded Target Date Fund and multi-alts offering for wealth. We do plan to do a spotlight on OHA and our efforts in alternatives on one of the earnings calls later this year, and anticipate having Glenn August join us for that call.
Speaker #6: As we referenced earlier , OHA deeply involved in our collaboration Goldman Sachs . Their private capabilities are designed several of the investment including the co-branded date retirement and multi alts strategies , offering for wealth .
Speaker #6: As we referenced earlier , OHA deeply involved in our collaboration Goldman Sachs . Their private capabilities are designed several of the investment including the co-branded date retirement and multi alts strategies , offering for wealth with We do plan to do spotlight a fund on OHA and our efforts in alternatives earnings calls .
Speaker #6: later On one of the and this anticipate year having that us for Glenn call August join .
Operator: Thank you. Our next question comes from Brennan Hawken with BMO Capital Markets. Your line is open.
Operator: Thank you. Our next question comes from Brennan Hawken with BMO Capital Markets. Your line is open.
Brennan Hawken: Good morning. Thank you for taking my question. You were speaking earlier to M&A and the sort of noise created in the target date, sort of DC plan sales process, plus maybe a few misses on some plans. Couple questions on that, couple follows. Were there any particular factors that caused the misses, and how are you adjusting your offering in order to enhance your competitive positioning? And can you speak to the pipeline? I know those sales cycles are likely pretty long, so how are we looking as we move forward on that front? Thanks.
Brennan Hawken: Good morning. Thank you for taking my question. You were speaking earlier to M&A and the sort of noise created in the target date, sort of DC plan sales process, plus maybe a few misses on some plans. Couple questions on that, couple follows. Were there any particular factors that caused the misses, and how are you adjusting your offering in order to enhance your competitive positioning? And can you speak to the pipeline? I know those sales cycles are likely pretty long, so how are we looking as we move forward on that front? Thanks.
Speaker #3: Our next question comes Thank you . from Brennan Hawken with BMO Capital Markets . line is Your open .
Speaker #7: Good morning . Thank you for taking my question . speaking earlier You M&A and the sort of noise to created were in the target date , sort DC of plan sales process .
Speaker #7: few Plus on misses some plans , a questions on that , a couple ups . Were there any of follow couple factors that that misses caused the and how are you offering in order to enhance your competitive positioning ?
Speaker #7: And can you speak to the pipeline, adjusting as you go? I know sales cycles are likely pretty long, so how are we looking as we move forward on that front?
Rob Sharps: Yeah. In terms of the Q4 activity, I think it's relatively straightforward. When one of our plan sponsors get acquired, eventually the acquirer consolidates the plans. In certain instances, we're given the opportunity to compete for the combined plan, and in certain instances, the acquirer makes the decision that they automatically want to consolidate with their incumbent target date fund provider. So, you know, I mean, at the end of the day, that kind of really is all the color on that that I have. I also don't really have any more color on the dynamic in the marketplace outside of saying that, we're seeing less interest in new opportunities for fully active target date fund and a significant increase in opportunities in blend and hybrid.
Robert W. Sharps: Yeah. In terms of the Q4 activity, I think it's relatively straightforward. When one of our plan sponsors get acquired, eventually the acquirer consolidates the plans. In certain instances, we're given the opportunity to compete for the combined plan, and in certain instances, the acquirer makes the decision that they automatically want to consolidate with their incumbent target date fund provider. So, you know, I mean, at the end of the day, that kind of really is all the color on that that I have. I also don't really have any more color on the dynamic in the marketplace outside of saying that, we're seeing less interest in new opportunities for fully active target date fund and a significant increase in opportunities in blend and hybrid.
Speaker #7: Thanks .
Speaker #6: Yeah , terms of in the Q4 activity , I relatively think it's straightforward . get When sponsors one of our plan eventually acquired , acquirer consolidates the plans in certain instances , given the opportunity to compete for the we're combined plan .
Speaker #6: And in certain instances , the acquirer makes the decision that they automatically want to consolidate with their incumbent target date fund provider . So at the end of , you know , I that kind of really all the is all the color on that , that I have .
Speaker #6: I don't really have any more color on the dynamic in the outside of that saying seeing we're interest in new opportunities for fully active target date fund and a significant increase in opportunities in in blend and hybrid , I think to some extent , reflection of where the market's that's a where the the power been , of the returns in the market cap weighted benchmarks US large cap equity .
Rob Sharps: You know, I think to some extent, that's a reflection of where the market's been, where the power of the returns in the market cap weighted benchmarks, particularly in US large cap equity. Ultimately, if that market dynamic changes and you have a backdrop that is more conducive to alpha generation from active management, then, you know, I think the fully active proposition will have more of an opportunity to stand out and be differentiated. In terms of the pipeline for target date funds, it would, again, be consistent with the comment. The overall activity is robust, but there we have more interest and more opportunity in blend and hybrid than we do in fully active.
Robert W. Sharps: You know, I think to some extent, that's a reflection of where the market's been, where the power of the returns in the market cap weighted benchmarks, particularly in US large cap equity. Ultimately, if that market dynamic changes and you have a backdrop that is more conducive to alpha generation from active management, then, you know, I think the fully active proposition will have more of an opportunity to stand out and be differentiated. In terms of the pipeline for target date funds, it would, again, be consistent with the comment. The overall activity is robust, but there we have more interest and more opportunity in blend and hybrid than we do in fully active.
Speaker #6: Ultimately, if that, particularly in changes, and you have a backdrop that is more conducive to that alpha generation from active management, then I think the fully will have more of a proposition to stand out and be, too.
Speaker #6: In terms the of pipeline for target date funds , it would again be consistent with the comment the overall activity is but robust , we have a more and more interest opportunity in blend and hybrid than we do in fully active .
Operator: Thank you. Our next question comes from Patrick Davitt, with Autonomous Research. Your line is open.
Operator: Thank you. Our next question comes from Patrick Davitt, with Autonomous Research. Your line is open.
Speaker #3: Thank next . comes Our from Patrick Davitt with Autonomous Research . Your line open is .
Patrick Davitt: Good morning. Thank you. Just most of mine have been asked, just a quick follow-up on, on that again. Can you remind on the target dates, can you remind on the cadence each year on when those lumpier plan losses can occur? I know mostly December, but I seem to remember there are a couple of other months where they can come through in the past as well. Thank you.
Patrick Davitt: Good morning. Thank you. Just most of mine have been asked, just a quick follow-up on, on that again. Can you remind on the target dates, can you remind on the cadence each year on when those lumpier plan losses can occur? I know mostly December, but I seem to remember there are a couple of other months where they can come through in the past as well. Thank you.
Speaker #8: Good morning . Thank you . most of Just been asked . Just a quick follow up on that again . Can you remind on the target on the cadence each on year when those ?
Rob Sharps: Yeah. Outside of elevated activity around year-end, I would say that, you know, it really is no specific seasonality to, like, to plan activity, and, you know, it really can happen throughout the course of the year.
Robert W. Sharps: Yeah. Outside of elevated activity around year-end, I would say that, you know, it really is no specific seasonality to, like, to plan activity, and, you know, it really can happen throughout the course of the year.
Speaker #8: losses lumpier plan can occur ? I know mostly December , but I seem to remember there are a couple of other they can come through months where Can you .
Speaker #8: In the past as Thank you .
Speaker #6: Yeah , outside of elevated activity around year end , I would say that it really there really is no seasonality to specific plan activity .
Operator: Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker #6: And you know , it really can happen throughout the course of the year to .
Speaker #3: Thank you . I'm showing no further questions at this time . This concludes today's conference call Thank you for . participating . may You disconnect now .
