* Net inflows 2.6 bln stg in Q3
* AuM 202.8 bln stg at end-September
* Pre-tax profits 88.6 mln stg in Q3
LONDON, Nov 8 (Reuters) - British fund firm Schroders said clients added 2.6 billion pounds ($4.2 billion) of net new money in its third quarter, beating forecasts as more benign markets encouraged them to invest more.
Of the 2.6 billion in net inflows for the three months to end-September, institutional clients added 1.9 billion pounds while retail clients 800 million pounds, Schroders said in a trading statement on Thursday.
Its private banking arm saw net outflows of 100 million pounds.
Analysts at Morgan Stanley had forecast 1.8 billion pounds of net inflows across the group, predicting that improved macro sentiment wouuld draw European retail clients back into funds.
Assets under management rose to 202.8 billion pounds, up from 194.6 billion pounds three months earlier, Schroders also said.
Pre-tax profits for the quarter came in at 88.6 million pounds, down from 101.6 million a year earlier.