T. Rowe Price faces market risk from fluctuating asset values and client cash flows, impacting investment advisory fees. The supplemental savings plan liability is sensitive to market movements. Potential earnout payments for the OHA acquisition are contingent on achieving revenue targets, introducing a risk of additional costs. Changes in legal, regulatory, and accounting requirements also pose risks. The firm's investments in affiliated private investment funds and collateralized loan obligations (CLOs) carry credit risk and interest rate risk.
Financial Upside
Strong investment performance, driving assets under management (AUM) growth, is a key upside. Market appreciation and income, net of distributions, increased AUM in Q3 2024. Higher investment gains and a lower effective tax rate contributed to increased net income and earnings per share. The firm's diversified investment strategies across equity, fixed income, multi-asset, and alternatives offer potential for growth.
