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T. Rowe Price (TROW) to Carve Out New Investment Platform

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T. Rowe Price Group, Inc. (TROW - Free Report) recently announced that it will establish a separate investment management arm — T. Rowe Price Investment Management, Inc. The move comes on the heels of the company’s plan of moving six of its equity and fixed income strategies from T. Rowe Price Associates, Inc. to the new investment platform.

The new entity will be a U.S.-based SEC-registered investment adviser, with its own leadership, separate from the parent company. The platform will have more than 100 associates and 85 investment professionals. The transition of the six strategies from T. Rowe Price Associates to T. Rowe Price Investment Management is set to take place in the second quarter of 2022.

The six strategies that are to be moved to the new entity have assets under management (AUM) worth $167 billion as of Sep 30, 2020.

T. Rowe Price does not expect the transition to have any impact on the control of management over T. Rowe Price Associates nor does it anticipate any change in fees or services provided to the funds and client accounts.

The presence of two separate investment platforms will aid the firm to get new clients and retain its scale benefits. Further, the flexibility and investment capacity of the company will  increase. The new unit’s fundamental research will be further enhanced by T. Rowe Price’s robust trading, quantitative abilities and corporate governance resources. Notably, the bank’s other multi-asset products and target date portfolios will remain unaffected.

The company has also been on a hiring spree for the new arm over the past two years and has further plans to increase its hiring next year.

Shares of the company have gained 21.7% in the past six months compared with 25.9% growth registered by the industry.

Currently, T. Rowe Price carries a Zacks Rank #3 (Hold).

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