By Sarah Krouse

Updated June 6, 2016 6:56 p.m. ET

One of America’s largest mutual-fund companies will pay $194 million to clients as compensation for a proxy-voting blunder, a rare level of atonement in the money-management world.

T. Rowe Price Group Inc. said thousands of customers will see a boost in the value of their portfolios as a result of the payments, which are designed to reimburse investors for a miscue that occurred during Dell Inc.’s management buyout in 2013.

The Baltimore money manager inadvertently voted in favor of, rather than against, the buyout, even though it was a vocal opponent of the deal. The firm argued at the time that the deal undervalued Dell’s shares.

T. Rowe Price will take a second-quarter charge equivalent to the $194 million routed to its funds and investor accounts, the company’s largest ever one-time deduction from earnings. The scale of the payment and the circumstances are unusual for a mutual-fund company, according to analysts.

Chief Executive William Stromberg said the fund firm is “rock solid” financially and that it would make the payments from its available cash. T. Rowe Price had $1.9 billion in cash and discretionary investments at the end of March. The company manages $764.6 billion in assets. The firm has no debt and will remain that way, a spokesman said.

Analysts said the company is among the publicly traded asset managers with the strongest balance sheet. But in the short term the charge could disappoint some shareholders because excess cash can be used for share buybacks, deals or other investments, they said.

“It does affect the brand a little bit, but that is offset by the notion that they are making good by their clients,” said William Katz, an analyst at Citigroup Inc.

No shareholders are receiving cash as part of this deal. Instead, T. Rowe Price’s remedy will result in a relatively small performance bump for affected portfolios because of the number that held shares and their size.

The payments will go to four U.S. mutual funds, one overseas fund, two trusts and about a dozen other institutional client accounts. The T. Rowe Price Equity Income Fund, which had about $22 billion in assets at the end of April, is the largest of the funds that will receive compensation. The payments will have the biggest impact on the $3.4 billion T. Rowe Price Science & Technology Fund because it holds a higher number of Dell shares as a percentage of its total assets.

Russel Kinnel, an analyst at research firm Morningstar Inc., said the impact “is really only meaningful” at the Science & Technology Fund, in which the payment will increase the fund’s net asset value by about 1.2%.

T. Rowe Price said it would pay the amounts immediately, and the contributions would be reflected in the funds’ next respective net-asset-value calculations, which take place after the market closes. Many clients will be able to see the changes by logging onto brokerage or other accounts Monday night or Tuesday morning, a spokesman said.

Administrative errors during the proxy voting process led to T. Rowe Price’s 2013 mistake. The default stance of T. Rowe in merger votes, like many of its large peers, is to support management, which in Dell’s case meant voting in favor of the deal.

T. Rowe Price’s computerized voting system gave instructions to vote “yes” that weren’t manually overridden before the final vote, according to court filings. The company launched a review of its internal voting procedures, The Wall Street Journal reported last week.

The mistake disqualified T. Rowe Price from suing for more money.

Other investors successfully sued and won compensation from a judge last week, who said Michael Dell and his partners underpaid by about $6 billion. The firm said Monday that the judge’s decision last week validated its investment thesis.

Few of the Dell investors are eligible for compensation due to the intricacies of the law in Delaware, where the suit was filed.

All told, a handful of former shareholders who challenged the deal will get about $35 million, including interest. Hedge fund Magnetar Capital LLC stands to collect about $25 million.

T. Rowe Price’s funds and accounts owned about 31 million shares in Dell at the time, and the firm said the $194 million charge represents the difference in the share-price valuations plus interest.

“Since this situation began, our focus has been on securing fair value from the Dell buyout for our clients,” Mr. Stromberg said, adding that “clients will come out ahead as compared with how they would have fared had they taken the merger consideration.”

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