January 28, 2014 / 2:20 PM / 4 years ago

UPDATE 2-T. Rowe Price profit jumps on retirement flows, shares up

Jan 28 (Reuters) - Asset manager T. Rowe Price Group Inc said on Tuesday its quarterly profit jumped 24 percent, beating estimates and boosting shares by more than 5 percent, as healthy inflows to retirement products offset outflows from other investment areas.

The pattern showed both the appeal of T. Rowe Price’s target-date funds aimed at individual investors in the fourth quarter and its exposure to withdrawals by institutional investors.

In a note to investors, International Strategy & Investment Group analyst Glenn Schorr said, “TROW’s performance and expense discipline (remain) rock solid.”

Shares jumped 5 percent to $80.36 in morning trading on Tuesday, outpacing most asset managers.

In an interview on Tuesday, T. Rowe Price Chief Executive James Kennedy said some of the withdrawals came as institutional clients changed their investment objectives rather than because of performance concerns.

Kennedy expects equity markets to benefit from a stabilizing economic outlook.

“The real economy is in better shape than it has been, and there’s more confidence in the sustainability of growth,” he said.

T. Rowe Price earned a net income of $287.7 million, or $1.06 per share, in the fourth quarter through Dec. 31, compared with $232 million, or 88 cents per share, a year earlier.

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

Assets under management were a record $692.4 billion as of Dec. 31, the company said. During the quarter, market gains added $45.1 billion to its assets and the company gained another $0.1 billion in net cash inflows from investors.

The inflows came as mutual fund investors added $3.8 billion during the quarter, mostly in its retirement funds and trusts, T. Rowe Price said.

Still, in other investment portfolios, such as the money it manages for institutions, there was a net outflow of $3.7 billion in the period, T. Rowe Price said.

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