Asset manager Eaton Vance Corp.’s (EV) fiscal 2010 first-quarter earnings surged to $46.2 million from $24.7 million in the year-ago quarter, primarily driven by higher fees on its funds amid an ongoing recovery in capital markets.

Excluding special items, earnings per share came in at 36 cents, matching the Zacks Consensus Estimate. The company now has either topped or met the Zacks Consensus Estimate in each of the last 4 quarters with an average positive surprise of 11.5%, or 4 cents.

Boston-based Eaton Vance provides investment management and counseling services to high-net-worth individuals and institutions. The company offers a range of products and services designed and managed to generate risk-adjusted returns over the long term. The asset manager operates through 4 affiliates ? Eaton Vance Management, Boston Management and Research, Eaton Vance Investment Counsel and Eaton Vance Trust Co. ? besides 4 other subsidiaries.

Quarterly revenue grew 29.9% year-over-year to $272.0 million, mainly driven by a 31.1% growth in investment advisory and administration fees to $210.4 million. The growth in fees was attributable to an increase in assets under management (AUM) to $161.6 billion from $121.9 billion a year-ago and $154.9 billion at the end of the last quarter.

Eaton Vance’s AUM was primarily driven by strong inflows in institutional and high-net-worth separate accounts, which expanded 42.0% year-over-year to $60.0 billion at the end of the quarter. Furthermore, a 21.5% growth in equity fund assets to $56.6 billion coupled with a 34.5% increase in fixed income funds to $26.7 billion also boosted overall AUM.

Operating expenses increased 17.3% to $184.7 million from $157.5 million in the year-ago period. This was mainly attributable to higher compensation expense due to increased bonuses Incorporatedentives and stock-based compensation coupled with higher distribution and service expenses. However, the top-line growth more than offset the increase in operating expenses. Consequently, Eaton Vance recorded a robust 68.0% growth in operating income to $87.3 million from $52.0 million in the year-ago period.

The company ended the quarter with cash and cash equivalents of $349.0 million, compared to $268.3 million in the year-ago quarter. During the quarter, Eaton Vance utilized $73.3 million for payment of dividends and $53.7 million for share buyback. The company is currently left with approximately 7.9 million shares out of an 8.0 million share repurchase authorization.

The Zacks Consensus Estimate on Eaton Vance’s earnings for the fiscal year ending October 2010 is currently pegged at $1.59 per share, which reduced 2 cents over the past month as 4 of 13 covering analysts lowered expectations. At $1.58 per share, the most accurate estimate is even more bearish.

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