Man Group, the world's largest quoted hedge fund, said assets under management fell by 2.3% during its fiscal first quarter to $38.5bn.
Hedge funds are suffering from risk averse investors, who have recently flocked to perceived safer heavens, such as gold and bonds, on fears that draconian cost cuts and banking problems could prolong the global recession.
"The quarter to 30 June has seen a return to increased volatility and uncertainty in financial markets," the London-based hedge fund said in a statement.
The shares, which have plunged by one third over the past six months, rose by 1.5%, or 3.3p, to 220p, as institutional investors, such as pension funds, withdrew less funds than expected. Redemptions reached $0.6bn, "the lowest absolute quarterly level for three years," the company said.
