T. Rowe Price Bets Big on Crypto and Interval Funds as Active Equity Bleeds

A Pivot Toward Lower Fee and New Vehicles

T. Rowe Price reported another quarter of net outflows ($6.5B) but management framed the quarter as one of progress, pointing to positive flows in May and June, a large sub-advisory win, and the launch of the company's first actively managed Crypto ETF. The launch is a notable departure from the firm's traditional core equity franchise and a direct bet on tokenization as a structural shift in investing. CEO Rob Sharps said, “Fundamental active equity remains under pressure. We expect that to continue in the second half of the year.” — Rob Sharps, Chair and CEO · 2026-07-31 Meanwhile, the firm is leaning into areas with better momentum: integrated equity strategies, active ETFs, and SMAs. The company's second fund with Goldman Sachs—a public-private equity interval fund—was filed, building on the first interval fund launched July 1.

This shift is reflected in the fee rate, which fell to 38.1 basis points from 38.4 in Q1, as client demand skews toward lower-fee strategies and vehicles. CFO Jen Dardis noted that the trend in effective fee rate "continues to reflect changes in asset and vehicle mix, including client demand for lower fee strategies and vehicles, as well as continued pressure from redemptions in higher fee equity strategies and mutual funds." The company's operating margin, which has trended down from post-pandemic peaks, underscores the mix pressure.

Expense Discipline vs. Investment

Investors pressed on expense growth relative to revenue. The firm raised full-year adjusted operating expense guidance to up 4%-7%, citing higher market-driven expenses and strategic investment. In Q&A, Rob Sharps emphasized the importance of balancing short-term efficiency with long-term growth:

The active equity business, even though it's been in outflow, is extraordinarily important to us. $900 billion of our AUM is in direct active equity, and it also has an impact on the underlying target date fund business.

This tension is not new. In May 2025, Sharps had already hinted at a long road: “I'm confident that we have a path back to positive flows. I think it's unlikely to be in 2025, but I think 2025 will take another step back in that direction.” — Rob Sharps, Chair, CEO, and President · 2025-05-02 The persistence of equity outflows and the erosion of fee revenue has made expense discipline a recurring theme. But the firm is deliberately investing in areas like ETFs, SMAs, and alternatives, even if it means near-term margin pressure.

Leadership and AI: A Forward-Looking Bet

The quarter also brought leadership changes: Eric Veiel was appointed President, and Sébastien Page became Co-Head of Global Investments. These moves signal a sharper focus on execution across the firm's highest-priority initiatives. Meanwhile, the company's AI deployment has scaled to over 130 solutions with 70% associate adoption. Sharps framed AI as a key lever: "We are moving beyond isolated use cases and tools and embedding AI directly into end-to-end business workflows." This is a deliberate investment in efficiency, but it also adds to the cost base in the near term.

On the product side, the emphasis on advisory wins and model delivery ties into the broader industry trend toward defined contribution and wealth platforms. The company's SMA platform now holds $20 billion in AUM, and the ETF business has grown to $30 billion. These are still small relative to $1.9 trillion in total AUM, but they are the growth engines management hopes will offset the decline in traditional active equity.

The story here is not a sudden turnaround but a deliberate, multi-year repositioning. T. Rowe Price is leveraging its research and distribution strengths to meet clients where they are—in ETFs, SMAs, and as a partner in alternative assets. The crypto ETF launch and the Goldman interval funds are concrete steps into adjacent, higher-growth pools. As Eric Veiel noted on the Russell reconstitution's market impact, “The rebalance did not simply reshuffle stocks. It effectively reassigned exposures to some of the most influential themes and factors.” — Eric Veiel, Co-Head of Global Investments, Chief Investment Officer, President · 2026-07-31 For T. Rowe, the same could be said of its own strategic rebalancing: it is reshuffling its product shelf to align with where flows are heading, even as the core business remains under pressure.