In my August 10 guest post at Dividend Power, I explain why I have no exposure to T. Rowe Price (TROW) and why I have no intention of initiating a position.
In an industry where participants are heavily dependent on Assets Under Management (AUM) and performance track record relative to peers, TROW's struggles are not encouraging.
While BlackRock (BLK), Blackstone (BX) and Brookfield Asset Management (BAM) have different business models from TROW, all asset managers compete for investor dollars. The fact these 3 firms have been able to grow their AUM more rapidly than TROW and that TROW decided to make its first major acquisition into private markets in late 2021, suggests TROW has its work cut out.
Compare the AUM growth of the following:
- BLK: ~$3.8T at FYE2012 to ~$9.425T at the end of Q2 2023 (148% growth).
- BX: ~$210.2B at FYE 2012 to just over $1T at the end of Q2 2023 (376% growth); and
- BAM: ~$175B at FYE2012 to ~$825B at the end of Q1 2023 (371% growth).
to that of TROW (142.5% during the 2012 - June 30, 2023 timeframe). Unless something drastic occurs, BX and BAM are likely to surpass TROW's AUM within the next decade. TROW's growth is similar to that of BLK but BLK was founded more than 50 years after TROW and it has $8T more in AUM.
TROW has a decent reputation as an asset manager. It is not, however, immune to the pressures caused by the growth of low-cost passively managed products.
I envision TROW's AUM will likely increase 3% - 5% on average annually over the next 3 - 4 years. This, however, is well below BLK's, BX's, and BAM's expected growth rates. Given my outlook for TROW and these other 3 asset managers, I choose not to invest in TROW.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I have no exposure to TROW and am long BLK, BX, and BAM.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
