Jen Dardis
Chief Financial Officer at T. Rowe Price Group
Thank you, Rob and hello, everyone. I'll review our third quarter results before opening the line for questions. Our adjusted earnings per share of $2.57 for Q3, 2024 is up over 18% from Q3 of last year, driven by higher average AUM, higher adjusted operating income and a lower effective tax rate. These factors also drove a nearly 14% increase in EPS from Q2 of this year. We reported $12.2 billion in net outflows this quarter, which is an improvement from Q3 2023, but higher than the first half of 2024. US equity products remain the primary driver of outflows, particularly in our growth strategies. Our US equity research strategy, however, had net inflows of over $1.5 billion this quarter.
We also had positive net inflows across fixed-income, multi-asset and alternatives. Within multi-asset, we had another strong quarter in our target date franchise with net inflows of $3.6 billion. Our year-to-date inflows of $14.1 billion outpaces the active industry growth rate, particularly in the blend category. Our ETF business had just under $1 billion of net inflows in the quarter, bringing our September 30th AUM to over $6.5 billion. And outside the US, we had positive net inflows driven by global equity in the APAC region and alternatives in the EMEA region.
As Rob mentioned, we were recently notified of a large sub-advised variable annuity termination. We expect that nearly all of the assets related to this termination will be redeemed during the fourth quarter. Given the size of this outflow, I want to provide some background on our VA business, which you'll find on page 15 of the supplement. At a high-level, we provide investment management services for VA products sold by insurance company sponsors. In some cases, we are the sole manager and the product may be branded as T. Rowe Price, while in other cases, we're one sleeve of a multi-manager product.
Our VA assets are $104 billion or a little over 6% of our total AUM, which is down from 9% in 2019. Similar to the overall VA industry, our VA business has experienced net outflows for the past several years and we don't expect that trend to change meaningfully. That said, given the large fourth quarter termination, the level of VA outflows for the full-year 2024 will be higher than we would have otherwise expected. While this area is not an organic growth driver for the firm, this book of business has many longstanding and important clients and we will continue to deliver on their behalf.
Shifting to our financials, our Q3 adjusted net revenues were $1.8 billion, which is up 7% from last year and up 3% from the second quarter, driven by higher investment advisory revenue from higher average AUM. Our Q3 annualized effective fee rate of 40.9 basis points declined from Q3 2023 and Q2 2024 as assets continue to shift into lower fee vehicles and asset classes. This quarter's investment advisory revenue of $1.6 billion included $5.6 million in performance based fees from alternatives products, primarily from the BDC.
Our adjusted operating expenses of $1.1 billion were up 3.6% from Q3 2023 due mainly to increases in compensation benefits and related costs and distribution and servicing fees on higher AUM. While G&A is also up from last year, Q3 2023 included a $20 million non-recurring cost recovery. Our adjusted operating income of $718 million was up 13% from Q3 2023 and almost 10% from last quarter.
For the balance of the year, we continue to expect 2024 adjusted operating expenses, excluding carried interest expense to be 6% to 8% over the comparable full-year 2023 amount of $4.19 billion. While we're at the bottom-end of this range through nine months, similar to last year, we anticipate an increase in a number of expense categories in Q4, some of which are due to seasonal factors and timing and will not carry into the 2025 run-rate. Notably, our stock-based compensation is typically higher in December given the timing of our annual grant and we expect advertising and promotion expenses to be higher due to the seasonality of our advertising efforts. We are also forecasting higher professional fees as we complete projects before the close of the year.
Turning our attention to capital management, we repurchased $71 million worth of shares during the third quarter, bringing the year-to-date value of buybacks to nearly $264 million. We feel comfortable with our current pace of buybacks as we evaluate repurchases through the remaining months of 2024. Combined with a quarterly dividend of $1.24 per share, we have returned over $1.1 billion to stockholders in the first nine months of the year. Our balance sheet remained strong with over $3.6 billion in cash and discretionary investments at the end of Q3.
As we approach year-end, our teams are focusing on 2025 and identifying the areas where we will invest to drive future growth and deliver new capabilities to best serve our clients. We will continue to balance this investment with the need for ongoing expense discipline.
And now, I'll ask the operator to open the line for Q&A.
