After nearly three years of gloom, the outlook for the fund industry may finally be brighter. At least it is for T. Rowe Price
. The Baltimore-based fund firm reported a healthy jump in profits that well exceeded the expectations of Wall Street analysts. The firm also reported its highest level of assets under management since the end of 2000.
"Things troughed last autumn and now we're in the process of rebuilding," George Roche
, president and chairman of the firm told analysts. "Revenue stabilized, expenses were under control, investment income where we had write downs was positive. All those things combined had the quarter come out where it did."
All counted, T. Rowe Price said it earned $53.8 million, or 42 cents a share, in the second quarter. Analysts had expected it to earn just 38 cents per share, according to Thomson First Call.
The growing bottom line came despite a decline in T. Rowe Price's top line. It reported revenues of $237.4 million, down $2.9 million from $240.3 million in 2002's second quarter. That fall was due to a drop of $5.8 million in its investment advisory fees to $183.9 million.
Yet, despite the fall in revenue, the quarter was a strong one for asset growth. Indeed, T. Rowe's assets under management grew by $21.3 billion to $161.2 billion as of June 30. Assets under management started the quarter at $139.9 billion.
Three quarters of the increase in assets under management was the result of appreciation, although the firm did report roughly $2 billion of net inflows during the three-month period and $4 billion of new deposits. Those figures are the largest reported by the fund firm since 1997.
"The strong cash inflows for the quarter were buoyed by steady inflows from our defined contribution plan clients, additions made through our third-party distributors, successful global sales efforts, and additions to our college savings plans, which recently topped $1 billion in assets," added Roche.
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