Invesco Ltd , one of the largest U.S. mutual fund companies, reported a higher-than-expected quarterly profit as it benefited from a big acquisition and increases in global stock markets.

Earnings, excluding certain items, rose to $209.3 million, or 44 cents per share, in the fourth quarter from $130.7 million, or 30 cents per share, a year earlier. Analysts were expecting 40 cents a share, according to Thomson Reuters I/B/E/S.

Invesco acquired Morgan Stanley's $115 billion retail fund unit in June for $1.5 billion, in time to benefit from the stock market's fourth-quarter surge.

Atlanta-based Invesco also saw increased flows into its fast-growing Powershares line of exchange-traded funds.

Assets under management totaled $616.5 billion at the end of 2010, up 34 percent from a year earlier.

Net outflows in the fourth quarter totaled $17 billion because of the loss of a single $18.6 billion indexed equity account from one client. Invesco had publicly disclosed the loss in prior announcements of its total assets. Rising markets boosted total assets by $24.2 billion.

Shares of Invesco closed at $23.77 on the New York Stock Exchange on Wednesday. The stock has gained 6 percent over the past three months, trailing the Standard & Poor's 500 index's <.SPX> 9 percent increase.

In June, Invesco paid about $1.5 billion in cash and stock for Morgan Stanley's $115 billion retail funds, including the Van Kampen line of mutual funds. During the fourth quarter, Invesco acquired $5.4 billion of alternative assets from AIG Global Real Estate Investment Corp.

Analysts and investors focus on Invesco's profit before items such as merger expenses and consolidated revenues and expenses from certain investments.

Under generally accepted accounting principles, the company had fourth-quarter net income attributable to common shareholders of $175.2 million, or 37 cents a share, compared with $110.9 million, or 25 cents a share, a year earlier.

(Reporting by Aaron Pressman; editing by John Wallace and Lisa Von Ahn)

Investment Morgan Stanley