UPDATE 2-AMG profit rises 8 pct, but cash earnings slip

* Cash EPS $1.05, 1 cent higher than Street view

* Revenue falls to $217.5 mln, $10.4 mln off expectations

* Net outflows $1.1 billion in quarter

* Flows would have been positive but for one large client

* Shares down 2.2 pct (Adds CEO and analyst comment, flow information, earnings details, byline)

By Ross Kerber

BOSTON, Oct 28 (Reuters) - Affiliated Managers Group Inc (AMG.N), a holding company for a set of investment firms, said quarterly profit increased 8 percent on rising stock market returns.

Net income was $17.8 million or 40 cents per share, for the third quarter, up from $16.5 million, or 39 cents per share, a year earlier.

Analysts and the company focus on cash earnings per share, which exclude the effects of factors such as amortization and depreciation. Cash earnings per share fell to $1.05 from $1.28 a year earlier. Revenue fell to $217.5 million from $290.8 million.

Analysts had expected the company to earn $1.04 a share on a cash basis, on revenue of $227.9 million.

Assets under management, a key driver of fund company profit and revenue, were $199.3 billion, up from $173.8 billion at the start of the quarter.

The company had net outflows of $1.1 billion during the quarter. AMG said flows would have been positive but for one large institutional client that moved its asset management in-house. It did not name the client.

AMG Chief Executive Sean Healey said the company is enthusiastic about its chances to grow through buying more smaller investment managers.

Sandler O'Neill analyst Michael Kim, who recently upgraded AMG shares, said the flow data reinforce his positive view.

"Excluding the client they mentioned, that flows turned positive across all channels suggests they have reached an inflection point," Kim told Reuters.

AMG shares were down 2.2 percent to $63.52 in early trade on the New York Stock Exchange. Through Tuesday, the shares had risen 56 percent this year, outpacing some larger competitors. (Reporting by Ross Kerber; Editing by Gerald E. McCormick and John Wallace)