T. Rowe Price's Q1 2026 earnings call highlighted moderate EPS growth and ongoing strategic investments in alternatives (via OHA), ETFs, and partnerships. Management provided insights into the credit market and differentiated OHA's strong institutional position against retail redemption fears in the BDC market. Adjusted EPS of $2.52 beat prior year, driven by higher AUM and cost savings.
T. Rowe Price's Q1 2026 earnings call highlighted moderate EPS growth and ongoing strategic investments in alternatives (via OHA), ETFs, and partnerships. Management provided insights into the credit market and differentiated OHA's strong institutional position against retail redemption fears in the BDC market. Adjusted EPS of $2.52 beat prior year, driven by higher AUM and cost savings.
T. Rowe Price's Q1 2026 earnings call highlighted moderate EPS growth and ongoing strategic investments in alternatives (via OHA), ETFs, and partnerships. Management provided insights into the credit market and differentiated OHA's strong institutional position against retail…
Adjusted EPS of $2.52 beat prior year, driven by higher AUM and cost savings.
Q1 net outflows of $13.7B, but target date, fixed income, alternatives, and ETFs saw inflows.
ETF AUM surpassed $25 billion, with $2.8 billion in Q1 net flows.
Management discussed AI disruption as a major theme affecting software and other sectors, but emphasized their underwriting focuses on mission-critical software and they have AI risk management tools. They believe the impact of AI disruption will create winners and losers over time, and view challenges as idiosyncratic, not systemic.
Management expresses a cautiously optimistic tone, highlighting growth initiatives in ETFs, SMAs, alternatives (via OHA), and new partnerships like Goldman Sachs and First Abu Dhabi Bank, while acknowledging ongoing outflows in equity strategies. The outlook hinges on successful execution of these growth drivers.
Management highlighted progress in strategic initiatives like ETFs, SMA, and OHA growth, and expressed confidence in market recovery and opportunities.
“The fund had redemptions well below the 5% limit during the first quarter and generated positive net flows for the period.”
“The spread widening on new deals is probably in the neighborhood of 25 to 50 basis points and it could widen out.”
“We focus on vertical mission-critical software and contractual recurring revenue models.”
“Our ETF assets under management surpassed $25 billion.”
| 지표 | 기간 | 범위 | 중간값 | 상태 |
|---|---|---|---|---|
| Op margin | FY2026 | 3%–6% | 4.5% | MAINTAINED |
The partnership with First Abu Dhabi Bank is on track for a mid-2026 launch, which could provide access to significant wealth management distribution in the Middle East.
“We advanced our partnership with First Abu Dhabi Bank from planning into execution, with preparations underway across marketing, training, and client support for a targeted mid-2026 launch.”
… week, Our ETF assets under management surpassed $25 billion. We are also developing plans to launch our first ETFs in Europe. Our SMA platform expanded to 42 offerings with more than $17 billion in AUM and over $900 million in net flows in the first quarter. We closed our first T. Rowe Price Managed CLO in early April. extending our floating rate capabilities into larger markets and diversifying our opportunity set. We advanced our partnership with First Abu Dhabi Bank from planning into execution, with preparations underway across marketing, training, and client support for a targeted mid-2026 launch. We are making progress in our partnership with Aspita, for which we manage both public and private assets totaling over half a billion dollars at the end of March. Our experience with Aspita is informing our approach to the substantial opportunity in insurance more broadly. We also formalized a new operating arrangement with OHA and are excited about our ongoing collaboration and the capabilities their team brings to the overall T. Rowe Price business. None of this progress would be possible without the exceptional talent and dedication of our associates, whose focus on clients …
The spread widening on new private credit deals is estimated at 25-50 basis points, with a noted decrease in PE-driven deal supply due to the war and AI disruption, creating a more favorable lending environment. — Wider spreads and less competition improve the economics for private credit lenders like OHA, though it also reflects broader market stress that could impact default rates.
“Our collaboration with Goldman Sachs is progressing with momentum building in model portfolios and product development advancing for the launch of an interval fund and target date sister series later this year.”
… in our active equity strategies, as well as our tactical asset allocation decisions. We advanced a number of important initiatives in the first quarter that strengthen our ability to deliver outcome-oriented solutions and expand our distribution relationships. A few examples of this work include our target date franchise continues to resonate in the market with notable growth in blend and hybrid products. Our collaboration with Goldman Sachs is progressing with momentum building in model portfolios and product development advancing for the launch of an interval fund and target date sister series later this year. Our ETF and SMA businesses continue to grow. We launched two ETFs this quarter, bringing our lineup to 32 ETFs. Eight of the 32 ETFs had scaled to more than $1 billion in AUM at the end of March. Our ETFs generated over $2.8 billion in net flows in the first quarter. As of last week, Our ETF assets under management surpassed $25 billion. We are also developing plans to launch our first ETFs in Europe. Our SMA platform expanded to 42 offerings with more than $17 billion in AUM and over $900 million in net flows in the first quarter. We closed our first T. Rowe Price …
Anthropic's new cloud release is cited as a catalyst for market concerns over AI disruption risk in incumbent software, a key risk factor in the credit portfolios.
“although it seemed like in February with Anthropic issuing its new cloud version, there seemed to be a lot more attention to it.”
Good morning. Thanks for taking the question. Glenn, I'd like to circle back on the question around software and AI disruption. It was pretty standard disclosure for all the alts to disclose the software exposure across the portfolio. I don't think you talked about it aside from talking about your comfort, so it would be great to get that number. And also, Just more importantly, process-wise, you know, AI is not new. The disruption, you know, in the public market sort of concern about it is far more elevated than it had been. But I'd be interested in hearing about how you integrate the assessment of AI risk into your underwriting processes because, you know, usually the exposure to…
Happy to do that. So first, with regard to your first question on allocation, we are basically in line with the market. The market has been in the neighborhood of 15% to 20% allocation to software credit. There's a broad range. There's also what I would say, to your point, software and ai disruption as a theme is much broader than what's going on in software and i share your view that there's been all this attention on the private credit markets but the reality is if you look at software equities they've gone down dramatically if you look at ibm stock which went down 80 in a six week period because of an ai threat to its cobalt business so So to our perspective, AI disruption is a major, major theme, and it didn't just happen overnight, although it seemed like in February with Anthropic issuing its new cloud version, there seemed to be a lot more attention to it. In terms of the underwriting, I want to just take a step back from the beginning question of this call and really embellish a bit here. So I mentioned that we've done software investing for basically 20 years, $40 billion of capital, and it really has all been about a theme of large cap mission critical players that are really embedded. And if you look at our portfolios versus many of our peers, they're very, very differentiated. We average probably three to 350 million of EBITDA in our companies. We are senior, the senior positions are 40%, 35, 35, 40% loan to value. They're actually performing quite well today. And again, one of my comments I often make is that proving against a hypothetical and a future product that might come out in a few years is a challenge. But we feel like we have very, very good businesses. And so we are continually underwriting and re-underwriting. We have AI risk management tools in terms of rating each one of our companies. And to your point, it's not just software. It's what happens in a bunch of the services sectors like accounting. and other areas. And we continuously, we underwrite our Oak Hills track record over four decades as having extremely low default experience. Our credit selections example in the bank loan area, over 25 years in our CLO business, we averaged about 30 basis points of default rate for the market that was two and a quarter. So the reason why we believe large institutional investors have chosen us to be one of their major credit partners is …
OHA sees a divide between institutional and retail investor behavior, with institutions 'leaning in' during volatility while retail is redeeming from BDCs, specifically noting O-Credit redemptions were 'well below the 5% limit' during Q1. — This differentiates OHA's retail BDC (O-Credit) from industry-wide redemption fears, potentially signaling better underlying performance or distribution strength versus peers.
… While the retail segment is a relatively small part of OHA's overall business today, we and T. Rowe Price jointly view it as an important growth opportunity, and we currently have two co-branded wealth products. O-Credit is our perpetual non-traded BDC with approximately $3 billion of investments at fair value as of year end. The fund was launched in 2023 has generated regular distributions, and has had zero defaults since inception. In fact, the fund had redemptions well below the 5% limit during the first quarter and generated positive net flows for the period. Our second product for the Wealth Channel is OFLEX, a new multi-strategy credit interval fund that was recently registered. This strategy has exposure to various asset classes, including private credit, structured products, special situations, and liquid credit, among others, as part of its mandate. On the insurance front, T. Rowe Price invested in a strategic partnership with Espida in early 2025, and TRP and OHA now manage certain public and private assets on behalf of Espida, a $30 billion life insurance and annuity platform. This partnership is one example of OHA's growing presence in the insurance market and the …
The spread widening on new private credit deals is estimated at 25-50 basis points, with a noted decrease in PE-driven deal supply due to the war and AI disruption, creating a more favorable lending environment. — Wider spreads and less competition improve the economics for private credit lenders like OHA, though it also reflects broader market stress that could impact default rates.
Thanks. Good morning. Glenn, I appreciate your comments and was hoping you could expand upon a few topics, specifically on the deployment opportunity you're seeing today with spreads being a bit wider, maybe some less competition, if you could talk about that. And then also, you talked about some of the challenges private credit is seeing, but could you discuss what OHA's exposure is to software and some of this AI disruption that's clearly an overhang here?
Sure. Thanks for the question, Dan. I'm delighted to be part of this call. The market clearly has widened and spread based on kind of classic supply-demand dynamics with demand a little lower or meaningfully lower in the wealth channel. The spread widening on new deals is probably in the neighborhood of 25 to 50 basis points and it could widen out. On the other side, the supply of new deals, the private equity market has been relatively uh relatively quiet during this period given the war given the ai disrupt disruption and so i think that the market is waiting i think for the war to be over to see more deal activity and i think we'll see a lot more interest then with regard to the ai disruption you know what i'd say is that we've been doing software credit for 40 years we have 40 billion dollar track record over at nine percent unlevered return And I think there's real differentiation in the credit space in software. We've avoided ARR loans. We've avoided technology risk. We focus on vertical mission-critical software and contractual recurring revenue models. And so we feel very well positioned.
OHA's credit selection has exposure to the AI disruption theme, but they claim differentiation by focusing on 'vertical mission-critical software and contractual recurring revenue models' and avoiding 'ARR loans'. — This strategy suggests OHA believes it is less exposed to AI disruption than peers with a focus on riskier, high-growth software credits, potentially protecting its loan portfolio performance.
Thanks. Good morning. Glenn, I appreciate your comments and was hoping you could expand upon a few topics, specifically on the deployment opportunity you're seeing today with spreads being a bit wider, maybe some less competition, if you could talk about that. And then also, you talked about some of the challenges private credit is seeing, but could you discuss what OHA's exposure is to software and some of this AI disruption that's clearly an overhang here?
Sure. Thanks for the question, Dan. I'm delighted to be part of this call. The market clearly has widened and spread based on kind of classic supply-demand dynamics with demand a little lower or meaningfully lower in the wealth channel. The spread widening on new deals is probably in the neighborhood of 25 to 50 basis points and it could widen out. On the other side, the supply of new deals, the private equity market has been relatively uh relatively quiet during this period given the war given the ai disrupt disruption and so i think that the market is waiting i think for the war to be over to see more deal activity and i think we'll see a lot more interest then with regard to the ai disruption you know what i'd say is that we've been doing software credit for 40 years we have 40 billion dollar track record over at nine percent unlevered return And I think there's real differentiation in the credit space in software. We've avoided ARR loans. We've avoided technology risk. We focus on vertical mission-critical software and contractual recurring revenue models. And so we feel very well positioned.
TROW's ETF business is seeing rapid growth, with AUM surpassing $25 billion and $2.8 billion in net flows in Q1, with a 'majority' stemming from investors they wouldn't have reached otherwise. — This rapid growth in active ETFs represents a strategic pivot for TROW, capturing flows from clients that prefer the ETF vehicle, putting it in direct competition with other active and passive ETF managers.
… with Goldman Sachs is progressing with momentum building in model portfolios and product development advancing for the launch of an interval fund and target date sister series later this year. Our ETF and SMA businesses continue to grow. We launched two ETFs this quarter, bringing our lineup to 32 ETFs. Eight of the 32 ETFs had scaled to more than $1 billion in AUM at the end of March. Our ETFs generated over $2.8 billion in net flows in the first quarter. As of last week, Our ETF assets under management surpassed $25 billion. We are also developing plans to launch our first ETFs in Europe. Our SMA platform expanded to 42 offerings with more than $17 billion in AUM and over $900 million in net flows in the first quarter. We closed our first T. Rowe Price Managed CLO in early April. extending our floating rate capabilities into larger markets and diversifying our opportunity set. We advanced our partnership with First Abu Dhabi Bank from planning into execution, with preparations underway across marketing, training, and client support for a targeted mid-2026 launch. We are making progress in our partnership with Aspita, for which we manage both public and private assets totaling …