UPDATE 2-Asset manager Liontrust blames negative UK sentiment as it posts client outflows

(Recasts, changes headline, adds shares, Quilter Plc)

Oct 18 (Reuters) -

Liontrust Asset Management said broad negative sentiment towards Britain was partly to blame for net outflows and falling client assets in the third quarter, as investors grappled with higher rates and jittery stock markets.

The British fund firm posted net outflows of 1.6 billion pounds ($1.95 billion) for the three months to September 30, with assets under management (AUM) shrinking 6.3% to 27.7 billion pounds. Shares opened 1.8% lower.

"Liontrust has been impacted by our bias towards equities, the quality growth style, mid- and small caps and the broad negative sentiment towards the UK," Chief Executive John Ions said in a statement.

The UK All Companies sector has been the worst net selling retail sector in Britain for six of the past seven quarters, according to the Investment Association (IA).

Lured by more attractive returns on cash, investors are reducing their levels of exposure to some equity investments, which are heavily buffeted by geopolitical conflict and recession worries.

But holding cash over the long term is not a strategy for delivering real growth for savers, Ions said.

"In time, cash will leave savings accounts and money market funds to return to investment markets. We are striving for Liontrust to be in the best position possible to attract investors' savings and to benefit when sentiment changes."

Ions said Liontrust's failed bid to acquire Swiss rival GAM had not changed the firm's strategic objectives and it would continue to pursue a broadening of its fund range by asset class, investment style and geographical distribution.

The company said it plans to restructure some areas of business but did not give details, while confirming its flexible remuneration model remained unchanged to ensure fund managers were aligned with investors.

Separately, wealth manager Quilter Plc said its AUM had stayed broadly flat with the previous quarter.

The company's platform business continued to attract inflows from independent financial advisers (IFAs), rising by 20% to 1.3 billion pounds compared with a year ago. ($1=0.8201 pounds) (Reporting by Yadarisa Shabong in Bengaluru and Pablo Mayo Cerequeiro in London; Editing by Sinead Cruise and Clarence Fernandez)