Private-Markets Boom Is Fragile Lifeline for Mutual Fund Titans

If there ever was a perfect moment for a mutual fund giant to leap into the hotter arena of alternative investments, T. Rowe Price Group Inc. seemingly found it. Its stock was soaring to record heights when executives picked their takeover target, Oak Hill Advisors.

The marriage hasn’t gone smoothly.

Combined assets are at the same level as four years ago, and the shares are down by almost half. Insiders describe a range of frustrations, with funds struggling to raise money and senior staff leaving.

This is now crunch time for traditional investment firms that once dominated Wall Street. With ...