UPDATE 3-Invesco profit down 53.5 pct but tops expectations

* Net income $75.7 mln vs $162.8 mln

* EPS 18 cents vs 41 cents

* Income, revenue rise from 1st quarter

* Shares slightly higher (Adds details, CFO comment)

BOSTON, July 27 (Reuters) - Asset manager Invesco Ltd (IVZ.N) said second-quarter profit fell 53.5 percent on lower revenue and fees, but the results beat Wall Street expectations.

Profit declined to $75.7 million, or 18 cents a share, from $162.8 million, or 41 cents per share, a year earlier, the fourth-largest asset manager by market capitalization said on Monday. Operating revenue dropped to $625 million from $935 million, mainly due to lower investment-management fees.

Analysts had expected, on average, earnings of 17 cents per share on revenue of $596.74 million, according to Reuters Estimates.

Profit and revenue rose from the first quarter, like other asset managers whose results are closely tied to market performance.

Similarly, Invesco assets under management at the end of June were $388.7 billion, up from $348.2 billion at the end of March but down from $461.3 billion a year earlier.

Chief Financial Officer Loren Starr told Reuters in an interview that the decline in assets under management from a year earlier was the main cause of the lower profit. But he also said improved fund flows and expense reductions should help going forward.

"We're hopeful that the markets will remain stable, which is all we need them to do," he said.

Sandler O'Neill & Partners analyst Michael Kim said the Atlanta-based company showed "positive operating leverage."

Excluding its institutional money-market funds, net inflows rose to $3 billion in the second quarter from $700 million in the first quarter. Kim said the change "reflected an inflection point, which most investors will view positively."

About a third of Invesco's client assets come from overseas customers, a much greater share than rivals, which means its results can be more influenced by currency changes.

In a note before the earnings, JP Morgan analyst Kenneth B. Worthington wrote that he expected Invesco to beat estimates, because a declining U.S. dollar will make its foreign business relatively more profitable and because of expected higher operating margins.

Invesco shares were up 10 cents to $19.46 in early trade on the New York Stock Exchange. The shares have risen 35 percent this year, in line with rivals including T Rowe Price Group (TROW.O) and Eaton Vance (EV.N) but trailing the much larger BlackRock Inc (BLK.N). (Reporting by Ross Kerber, editing by Maureen Bavdek and John Wallace)