UPDATE 2-T. Rowe Price profit jumps 25 pct as its funds win favor

Thu Apr 24, 2014 10:55am EDT

* Q1 earnings per share $1.12 vs est of $1.03

* Investment advisory fees up 18 pct to $826.4 mln

* Assets under management $711.4 bln as of March 31 (Adds share price, analyst comments)

April 24 (Reuters) - Asset manager T. Rowe Price Group Inc reported a stronger-than-expected 25 percent rise in quarterly profit on Thursday as its funds attracted more money from investors, boosting fees.

Shares in the Baltimore, Maryland, company were up about 2 percent in morning trading at $83.11.

Assets under management as of March 31 rose 2.7 percent to $711.4 billion from the preceding quarter. Market gains added $10.2 billion to assets under management and the company received another $8.8 billion in net cash inflows from investors.

Of those inflows, $6 billion went to the company's target-date retirement products.

The inflows reflect the relatively strong performance of many T. Rowe Price funds and their popularity with individual investors. The flows beat expectations and helped drive up the company's shares, analysts said.

"This is a good environment for them. There is more retail engagement in the marketplace and they have a solid lineup of retirement products," said Gabelli & Co analyst Macrae Sykes. Sykes and Sandler O'Neill analyst Michael Kim also credited the company with ending outflows from products aimed at institutional investors.

In a statement, T. Rowe Price Chief Executive James Kennedy said that economic confidence has risen. "The good news is there is general acceptance that the economic growth in the U.S. is stable and sustainable - subdued as it is," he said.

Net income allocated to common stockholders rose to $301.1 million, or $1.12 per share, in the first quarter ended March 31, from $240.1 million, or 91 cents per share, a year earlier.

Analysts on average had expected earnings of $1.03 per share, according to Thomson Reuters I/B/E/S.

Investment advisory fees rose about 18 percent to $826.4 million.

Net revenue rose 17 percent to $954.6 million. (Reporting by Avik Das in Bangalore and Ross Kerber in Boston; Editing by Don Sebastian; and Peter Galloway)