Recasts, adds shares in paragraph 4, details in paragraph 2, background in paragraph 5 onwards

By Iain Withers

LONDON, July 30 (Reuters) - British money manager Aberdeen ABDN.L reported a forecast-beating first-half profit on Wednesday, but flagged that price cuts at its adviser arm designed to compete with lower-fee rivals would eat into its margins.

Aberdeen, which rebranded from its widely-mocked truncated name "abrdn" earlier this year, reported outflows of client cash over the period of 900 million pounds ($1.2 billion), although the figure was narrower than expected.

Analysts said Aberdeen's lower costs and an improvement in its investment returns could lead to performance forecast upgrades, but that expected lowered margins at its adviser unit were a weak point.

Shares in the company were broadly flat in early trading, but they remain up around 40% over the year-to-date as investors have warmed to CEO Jason Windsor's turnaround plan focused on trimming costs and sharpening its wealth credentials.

European active fund managers have been squeezed in recent years by competition from low-fee index-tracker products offered by the likes of U.S. giants BlackRock and Vanguard, eating into their market share.

Windsor told reporters that the fund industry was still facing margin pressures, but that this had stabilised in some markets and there were still areas to grow.

Its Interactive investor unit reported record net inflows for the period of 4 billion pounds, as consumers continued to show appetite for buying stocks and bonds despite volatile markets in part fueled by U.S. trade policy under President Donald Trump.

The first-half outflow compared with 800 million pounds of net inflows in the same period the prior year, although the numbers were skewed by a swing in flows away from low-fee cash funds.

The fund manager said assets under management were 517.6 billion pounds, slightly ahead of forecasts, while it also reported an adjusted operating profit of 125 million pounds, beating forecasts but down 2% on the prior year.

It said it would pay an unchanged interim dividend of 7.3 pence per share.

($1 = 0.7488 pounds)

(Reporting by Iain Withers; Editing by David Holmes)

((Iain.Withers@thomsonreuters.com;))