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Och-Ziff’s AUM drain continues in first quarter, falling 10.6%

Dan Och
Daniel S. Och

Och-Ziff Capital Management Group's assets under management fell 10.6% in the quarter and dropped 21.5% in the year ended March 31 to $33.9 billion, the firm's earning report released Tuesday showed.

During the year ended March 31, net outflows totaled $11.7 billion, fund distributions totaled $800 million and investment gains were $3.2 billion for a net decline of $9.3 billion. Och-Ziff's net outflows for the three months ended March 31 totaled $4.8 billion, fund distributions were $66 million and investment gains were $932 million for a net decline of $3.9 billion Och-Ziff's multistrategy hedge fund assets declined 35.6% to $17.7 billion in the year ended March 31. Assets managed in other strategies showed growth during the same period, with institutional credit up 11.1% to $8 billion, real estate up 4.8% to $2.2 billion and opportunistic credit funds up 1.9% to $5.3 billion. Other miscellaneous assets dropped 41.7% to $700 million.

As of May 1, the Och-Ziff report noted that firmwide AUM fell 15.6% to $32 billion since Dec. 31 and was down 5.6% from March 31, 2016.

Och-Ziff's assets as of March 31 were down 29.8% compared to the firm's peak AUM of $48.3 billion as of March 31, 2015.

However, net returns for the quarter ended March 31 were positive for all of the firm's investment strategies: OZ Enhanced Master Fund, 6.6%; OZ Asia Master Fund, 6.4%; OZ Master Fund, 4.1%; OZ Credit Opportunities Master Fund, 3.2%; and customized credit-focused strategies, 1.2%.

“As we have said many times, we are a performance-driven business, and we believe our strong absolute and relative returns across funds, strategies and regions over the first quarter, and more importantly over the past 12 months, is a leading indicator of our firm's future financial performance. We believe the current market dynamics favor our business model as security selectors and asset allocators,” said Daniel S. Och, the firm's chairman and CEO, during the earnings call Tuesday, a transcript showed.

“We are very pleased with the results of the Master Fund over the last 12 months and believe this performance is resonating with clients. As we have said before, we are also focused on growing our opportunistic credit, real estate and (collateralized loan obligation) businesses on the back of their respective multiyear strong returns,” Mr. Och added.

Och-Ziff Capital's total revenue in the quarter ended March 31 was $139 million, compared to $188 million in the first quarter of 2016. The firm's net loss was $4 million in three months ended March 31 vs. a $69 million loss in the first quarter a year ago.