UPDATE 3-Och-Ziff distributable earnings climb, assets rise

* Distributable earnings jump 52 percent to $52.1 mln

* Assets up 19 percent to $26.5 billion at Sept. 30

* Shares rise 1.6 percent (Adds details on strategy, CEO quote, share price, byline)

By Svea Herbst-Bayliss

BOSTON, Nov 2 (Reuters) -Hedge fund company Och-Ziff Capital Management Group (OZM.N) said quarterly profit jumped more than 50 percent as fresh demand for its portfolios boosted management fees.

Och-Ziff shares traded higher for most of the morning, briefly climbing as much as 2 percent. Most other asset managers posted small gains.

Having pulled in more than $2 billion in new assets since January, CEO Daniel Och told analysts he expects more money to come in the door as pension funds and wealthy investors steadily raise their allocations to hedge funds.

"We are still generating the returns with a very, very conservative posture," Och, who helped found the firm 16 years ago, said on a teleconference. "That is important to us and to our investors."

Och-Ziff, which invests money for investors like Calpers, America's largest public pension fund, is one of only a handful of publicly traded hedge fund firms. Known for its conservative management style, Och-Ziff's main funds have delivered positive, albeit modest returns this year, fueled mostly by credit-related strategies. The flagship OZ Master Fund rose 6.7 percent during the first 10 months of the year, trailing the average stock mutual fund's 8.7 percent return.

The company reported third-quarter "distributable earnings," which exclude costs related to its November 2007 initial public offering, of $52.1 million, or 13 cents per share. The results were in line with analysts' expectations, according Thomson Reuters I/B/E/S.

A year earlier, the company reported distributable earnings, the number looked at most closely by analysts, of $34.2 million, or 8 cents a share.

During the quarter, assets rose 19 percent to $26.5 billion at Sept. 30. Management fees climbed 22 percent to $105.5 million, leaving total revenue up 24 percent at $114 million.

The company reported a net loss of $93.5 million for the quarter, related largely to expenses from the IPO.

Demand for Och-Ziff's portfolios has risen steadily this year. Assets under management reached an estimated $27.2 billion on Nov. 1, the company said.

Since January, assets have increased by about $4.1 billion, or 18 percent, fueled both by a $2.4 billion increase in new money and $1.7 billion in performance gains as markets recovered.

The company said it will pay a quarterly dividend of 10 cents a share, down from 11 cents in the previous quarter. Distributable earnings were lower in the third quarter than in the second quarter.

Och said he and his managers are seeing improved investment opportunities and are putting more money to work, having reduced cash holdings from about 20 percent to about 9 percent.

Och-Ziff shares were up 24 cents to $15.12 in afternoon trade. They have climbed more than 7 percent this year but remain far below their IPO price of $32. (Reporting by Svea Herbst-Bayliss; Editing by Dave Zimmerman and John Wallace)