T. Rowe Price Group, Inc.

Good morning. My name is Norma, and I'll be your conference facilitator today. Welcome to T. Rowe Price's third quarter 2023 earnings conference call. All participants will be in a listen-only mode until question and answer period. I'll give you instructions on how to ask questions at that time. As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website shortly after the call concludes. I will now turn the call over to Linsley Carruth, T. Rowe Price's Director of Investor Relations. Please go ahead.

Hello, and thank you for joining us today for our third quarter earnings call. The press release and a supplemental materials document can be found on our IR website at investors.teroprice.com. Today's call will last approximately 45 minutes. Our CEO and President Rob Sharps and CFO Jen Dardis will discuss the company's results for about 15 minutes, and then we'll open it up to your questions. We ask that you limit it to one question per participant. We also have Eric Feil, T. Rowe Price Associates Head of Global Equity, here with Rob and Jen today for the question and answers portion of the call. I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain non-GAAP financial measures. Please refer to the forward-looking statement language and the reconciliations to GAAP in the supplemental materials, as well as in our press release and 10-Q. All investment performance references to peer groups on today's call are using Morningstar peer groups. Now I'll turn it over to Rob.

Thank you, Lindsley, and thanks to all of you for joining us today. Third quarter trends were largely similar to what we experienced earlier in the year. Relative investment performance was solid and particularly strong in our largest franchises. We made progress on our strategic initiatives and we executed on planned cost savings efforts. At the same time, we haven't seen any improvement in net flows and don't expect to for the balance of the year. That said, We do expect flow trends to recover somewhat in 2024 as improved performance takes the pressure off of redemptions from U.S. large cap equity products, investors come off the sidelines, and we realize the impact of our strategic investments. Turning now to investment performance. As you know, most equity and fixed income markets fell in the third quarter as investors grew increasingly concerned about a prolonged period of higher interest rates. During these choppy markets, we posted another quarter of solid investment performance relative to peers, particularly in many of our U.S. equity and multi-asset strategies. Our U.S. equity products were resilient with more than 70% of the mutual funds outperforming their peer group medians. All three of our large cap growth products were above the median and beat their benchmarks in the quarter, and each have top quartile performance for the year-to-date time period. Other strong performers in our U.S. equity range included all-cap opportunities, U.S. large-cap core, and science and technology, which all had top quartile performance versus peers for the quarter, adding to their solid multi-year track records. International equity products continued to have solid long-term relative peer results, despite losing some ground during the quarter. We launched five new active ETFs in June, and our four active U.S. equity ETFs got off to a strong start, with all beating their benchmarks in the first full quarter since launching. Our capital appreciation fund continues to deliver consistent outperformance relative to peers and is in the top decile versus peers in the 1, 3, 5, and 10-year time periods. Our target date products added another strong quarter, largely driven by our active security selection and differentiated portfolio construction. All vintages of the flagship retirement funds were in the top quartile versus peers, adding to their strong long-term track record. Fixed income performance was solid, with over 60% of our mutual funds outperforming their peer group meetings. Topping the list were our dynamic credit bond fund, which was recently added to our target date building blocks, and the global high income bond fund, both of which were top decile performers in the quarter. Alternative strategies generated solid absolute and relative performance during the quarter, with strong results in private market strategies. OHA liquid credit strategies outperform their benchmarks as well. While I'm encouraged by improvements in our investment performance, as I mentioned at the outset, we continue to see net outflows. Third quarter flows and negative $17.4 billion were largely consistent with recent levels. The asset class trends remain the same, with U.S. large cap equity accounting for a majority of the net outflows. Looking ahead, We expect fourth quarter flows to be worse than recent trends, with further weakness concentrated in November and December. Our forecast considers that December has been particularly weak over the last few years and reflects notified terminations and redemptions, including those related to a handful of large sub-advisory mandates. We continue to proactively manage expenses to create a cost structure appropriate for the size and scale of the firm today, and to allow for continued investment in our strategic priorities. Jen will talk more about these expense efforts in a moment, but first, I'd like to highlight a few of our accomplishments during the quarter. We launched our first joint investment offering with OHA, the T. Rowe Price OHA Select Private Credit Fund, offered as a non-traded, perpetual-like business development company, or BDC structure. We are focused on building a durable and repeatable process to deliver alternative investments to the wealth management channel. Ocredit launched with $1.5 billion of investable capital, making it one of the industry's largest non-traded BDC launches. This includes over $600 million raised in equity commitments from T. Rowe Price and a group of global institutional investors, in addition to $875 million in credit facility commitments. Our ETF franchise is expanding, with AUM totaling $1.7 billion as of September 30th. Our new capital appreciation equity ETF, or TCAF, has attracted strong interest since launching in June, with over $190 million in net flows and placement with 12 broker-dealer clients. In the third quarter, associates in London moved to our new office in Warwick Court on Pattern Oster Square. And we marked the end of exterior construction of our new global headquarters at Harbor Point in Baltimore, Maryland, with a ceremonial beam signing. Both offices are an investment in the associate experience and have been designed to foster collaboration, a cornerstone of our culture. It's our culture and the dedication and hard work of our associates that are driving our progress on our path to return the firm to organic growth. We have some of the best talent in the industry, and we're squarely focused on delivering consistently strong, long-term investment performance and world-class service for our clients, sustaining our culture of excellence and collaboration, and carefully managing our financial results through this environment. I'm grateful to our teams for keeping our clients at the center of all we do. I'll now turn to Jen to cover our financial results for the quarter.