Och-Ziff eyes new portfolios, will invest own money

* Och-Ziff to put own money in new funds

* Expects step will help attract new investors

By Svea Herbst-Bayliss

BOSTON, June 3 (Reuters) - Och-Ziff Capital Management (OZM.N), one of the world's few publicly traded hedge fund companies, plans to put its own money into its new portfolios and hopes this will prompt other investors to follow.

The $21.5 billion hedge fund company, which currently manages four portfolios, is considering adding funds that will focus on energy and other areas, Chief Executive and Chairman Dan Och said on Wednesday. Och-Ziff previously said it was readying a new mortgage fund.

"When we roll out these funds we will be the first investor ourselves," Och, a former Goldman Sachs trader known for delivering consistently steady returns, said at a business conference that was broadcast on the Web.

"And then we hope the investors want to follow," he added.

Och-Ziff is one of the biggest companies in the $1.3 trillion industry, but its assets declined after pension funds, endowments and wealthy individuals hastily exited hedge funds when the financial crisis deepened in 2008.

The company, which managed $30 billion when it went public in October 2007, now wants to build its assets back up.

One reason assets shriveled recently is that Och-Ziff, unlike many rivals, did not prevent investors from pulling their money out late last year when industry returns sagged.

While that decision hurt the company in the short run, it will likely attract new clients who place a premium on transparency and access to their money, Och said.

"We did not enjoy what we had to go through, but we think it will benefit us in the long term," he said.

Assets under management have already begun to grow again. On June 1, Och-Ziff managed $21.5 billion, $900 million more than it reported the previous month.

Part of the increase is related to better performance, another factor that will likely bring in new money, Och said. The company's Och-Ziff Master Fund Ltd returned 9.8 percent in the first five months of 2009, besting the average hedge fund return of 5.6 percent, according to data from Hedge Fund Research.

"Investment performance leads to growth in assets under management and we want to give investors more and more reasons to invest with us," Och said.

Industry-wide, investors will likely return to hedge funds slowly later this year after having turned their backs on the asset class last year, Och forecast.

Redemptions, which hit a record $152 billion in the fourth quarter of 2008, have slowed in the first months of 2009, industry data shows. (Editing by Steve Orlofsky)