Company: TROW
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0001113169-25-000007
Chunk: 13

Company: PRICE T ROWE GROUP INC
Filing Date: 2025-02-14
Form: 10-K
Item: Item 7A
Chunk 13
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

EQUITY PRICE RISK.

Our investments in sponsored investment products are carried at fair value, and, as such, these investments are subject to market risk. The following table presents the equity price risk from our investments. Investments in our sponsored investment products generally moderate market risk as they are diversified and invest in a number of different financial instruments. T. Rowe Price manages its cash and discretionary investments exposure to market risk by diversifying its investments among various fixed income portfolios. In addition, investment holdings may be altered from time to time in response to changes in market risks and other factors, as management deems appropriate. We do not actively hedge the market risk related to our seed capital investments.

In order to quantify the sensitivity of our investments to changes in market valuations, we have chosen to use a variant of each product's net asset value to quantify the equity price risk, as we believe the volatility in each product's net asset value best reflects the underlying risk potential as well as the market trends surrounding each of its investment objectives. The potential future loss of value, before any income tax benefits, of these investments at December 31, 2024 was determined by using the lower of each product’s lowest net asset value per share during 2024 or its net asset value per share at December 31, 2024, reduced by 10%. In considering this presentation, it is important to note that: not all products experienced their lowest net asset value per share on the same day; it is likely that the composition of the investment portfolio would be changed if adverse market conditions persisted; and we could experience future losses in excess of those presented below.

Additionally, the underlying holdings of our assets under management are also subject to market risk, which may arise from changes in equity prices, credit ratings, foreign currency exchange rates, and interest rates. 

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(in millions)Fair value 12/31/2024Potential lower valuePotentiallossInvestments in sponsored productsDiscretionary investments$258.8 $232.9 $25.9 10 %Seed capital not consolidated262.8 231.0 31.8 12 %Investments designated as an economic hedge of deferred compensation liabilities992.8 859.1 133.7 13 %Investments in affiliated collateralized loan obligations6.3 5.7 0.6 10 %Total$1,520