T. Rowe Price to acquire F/m Investments, adding $19B in assets

T. Rowe Price agreed to acquire F/m Investments, a $19 billion fixed-income ETF specialist, more than doubling its fixed-income ETF assets and expanding its separately managed account platform.

"This is a scale game, and success for us wasn't going from managing $20 billion to $30 billion or $40 billion, it was boosting activity 10x or beyond," said Alex Morris, founder and CEO of F/m Investments.

T. Rowe Price manages $1.87 trillion in assets, but only about $6.5 billion of its $220 billion fixed-income investments sit in its own ETF products. The firm ranks 26th among U.S. ETF providers, with 80 percent of those assets in equity funds, said Bryan Armour, an analyst at Morningstar. The acquisition is expected to increase T. Rowe Price's fixed-income AUM by nearly 9 percent and more than double its fixed-income ETF assets, with the deal expected to close in early 2027.

The transaction is the second ETF manager acquisition announced this month, following Goldman Sachs' deal to buy Neos Investments for as much as $2.25 billion. Goldman closed its estimated $2 billion purchase of Innovator Capital in April. The deals point to a wave of consolidation in the $15.7 trillion U.S. ETF industry as growth in fixed-income ETFs now outpaces equity ETFs, according to State Street Investment Management data as of July 31.

F/m Investments, founded in 2019 and headquartered in Washington, D.C., manages approximately $19 billion across ETFs, institutional separate accounts, and taxable and municipal separately managed accounts. More than $10 billion of that sits in its suite of 20 ETFs, which cover Treasuries, TIPS, corporate bonds, and municipal securities. The firm created the US Benchmark Series, the first standardized suite of single-security U.S. Treasury ETFs, and was the first asset manager to launch a dual-share class ETF following the SEC's decision to allow both mutual fund and ETF share classes of the same portfolio. It also filed earlier this year for permission to tokenize shares of its three-month Treasury bill ETF.

The agreement was reached after F/m received multiple expressions of interest from potential partners or acquirers and decided to open a formal process, Morris told Reuters. F/m is an affiliate of 1251 Capital Group, a financial services holding company.

"F/m brings unique ETF product development capabilities that will complement T. Rowe Price's active fixed income lineup," said Arif Hussain, head of global fixed income at T. Rowe Price.

Upon closing, F/m will operate as "F/m Investments, a T. Rowe Price Company," retaining its brand, leadership, and investment approach. Morris will report to Hussain, and F/m employees will become T. Rowe Price associates.

ETF consolidation accelerates with second deal this month

The deal follows a pattern of consolidation in the ETF industry. Goldman Sachs agreed last week to acquire Neos Investments for as much as $2.25 billion, its second ETF manager purchase after closing the estimated $2 billion deal for Innovator Capital in April. Growth rates in fixed-income ETFs now exceed those in equity ETFs in the U.S., measured as a percentage of assets under management, according to State Street data.

"This is a reflection of how competitive the landscape is becoming in ETFs as the market grows and grows," said Todd Sohn, ETF strategist at Strategas. "All the successful smaller players out there are still going to need to find a way to boost product distribution channels; if you're an established asset manager with a smaller footprint in ETFs, acquisitions increasingly will be a way to tap into that growth."

Terms of the transaction were not disclosed. Dechert LLP served as legal counsel to T. Rowe Price, while Oppenheimer & Co. acted as exclusive financial advisor to F/m Investments. Fried, Frank, Harris, Shriver & Jacobson LLP served as legal counsel to the majority owners of F/m.

The acquisition reflects T. Rowe Price's push to expand beyond its traditional equity strength into fixed income and ETF products, a segment where it has lagged peers. With $1.87 trillion in total assets under management, the firm's fixed-income ETF footprint of roughly $6.5 billion was small relative to its $220 billion fixed-income book. The deal brings that ETF figure to more than $16 billion, giving T. Rowe Price a more competitive position in a segment where growth now outpaces equities. The last time T. Rowe Price made a comparable strategic acquisition was its purchase of Oak Hill Advisors in 2021, which added $18 billion in credit assets and helped build out its private credit platform.

This article is for informational purposes only and does not constitute investment advice.