UPDATE 2-Waddell & Reed fourth-quarter profit up on fees

Mon Jan 31, 2011 8:48am EST

* Kansas fund company profit up 39 pct

* Total assets at $83.6 bln from $69.8 bln year ago

* Loses $550 mln pension account (Adds detail on pension account, flows and analyst comment)

BOSTON, Jan 31 (Reuters) - Waddell & Reed Financial Inc's (WDR.N) fourth-quarter profit rose 39 percent on higher fees, the asset manager said on Monday.

Net income increased to $46.4 million, or 54 cents per share, from $33.3 million, or 39 cents per share, a year earlier.

Analysts on average had expected a profit of 50 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 15 percent to $281 million, compared with analysts' estimates of $274 million.

Assets under management at Dec. 31 were $83.7 billion, up from $75.9 billion in the previous quarter, on $6.5 billion in market appreciation and a rise in net inflows of cash to $1.2 billion from $658 million. Year-earlier assets under management were $69.8 billion.

Redemptions also rose in the fourth quarter, including the loss of a pension account worth $550 million, Waddell & Reed said. A spokeswoman said the company would not identify the client or the reason for the withdrawal.

Waddell & Reed is one of the smaller publicly traded fund companies. Last week, its competitors reported mixed results on flows, a key metric for asset managers. Legg Mason Inc (LM.N) and Janus Capital Group (JNS.N) reported widening outflows, while others like Franklin Resources (BEN.N) reported slowing inflows.

Stifel Nicolaus analyst Jeffrey Hopson said Waddell & Reed's earnings and flows were in line with his expectations. "It looks like a clean quarter," he said. (Reporting by Ross Kerber, editing by Maureen Bavdek and Lisa Von Ahn)

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