Strong revenue growth in T. Rowe Price Group's [see profile] mutual funds did not keep the mutual fund firm on top of Wall Street analysts' hopes. That news came Tuesday morning as executives at the mutual fund firm unveiled its numbers for the third quarter ending with September. Top executives at the mutual fund firm explained that global market volatility in Q3 caused its AUM to fall to $453.5 billion on September 30 from $520.9 billion at June 30.

Anaylsts expected T. Rowe to report earnings of 74 cents per share on expected sales of $689.5 million today. The Baltimore-based mutual firm came up short with a diluted earnings per common share of 71 cents on revenues of $679.4 million.

The earnings miss came despite a year-over-year increase in investment advisory revenues from the T. Rowe Price mutual funds distributed in the U.S. increased $53.6 million to $397.8 million. That translates to annual growth of nearly 16 percent.

"The resulting market depreciation, combined with modest outflows during the quarter -- our first since the fourth quarter of 2008 - led to a reduction in assets under management and quarterly net income and earnings compared with the prior three quarters," stated James Kennedy, the company's chief executive officer and president.

"Quarterly advisory revenues declined a bit from the record levels of the second quarter, and we expect those results to continue to moderate since they are calculated based on average assets under management. In this environment we remain vigilant about our expense management, both for the remainder of this year and as we plan for 2012."

Money Funds Cost

T. Rowe Price did not escape the hit that most money market fund sponsors are taking in order to keep their funds' yields in the black as short-term interest rates hover near zero. T. Rowe executives disclosed that the mutual fund firm voluntarily waived money market fund fees of $10.7 million in the third quarter of 2011. They explained that the fee waiver enabled funds to maintain a positive yield for shareholders.

That amount doubled the money fund fee waivers of $5.2 million in the comparable 2010 quarter.

FNN Online, the Wall Street Journal, and Bloomberg also covered the earnings release.  

Edited by: Hung Tran


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