Cautious outlook, outflows take shine off Man Group's march to record assets

* Adds $9 bln, takes FuM to new $82 bln peak

* Positive investment performance boosts assets by $4.3 bln

* Chairman Jon Aisbitt to step down May 2016

* Remains cautious about outlook

* Shares down 0.5 pct (Updates share price move)

LONDON, May 8 (Reuters) - Man Group (LSE: EMG.L - news) 's march to record funds under management (FuM) failed to enthuse investors on Friday as a cautious outlook and higher than expected outflows pulled down its shares despite a rally in the financial sector stocks.

The world's biggest listed hedge fund has added $9 billion this year to take its FuM to $82 billion, surging past a previous peak of $79.5 billion hit in mid-2008.

Investment performance boosted assets by $4.3 billion, while acquisitions of money managers Silvermine, NewSmith and the fund of funds unit of Bank of America added $6.2 billion.

However the firm suffered a $2 billion loss due to foreign exchange movements, while net outflows at $1.3 billion were above the $300 million consensus forecast. The hedge fund also reiterated its caution on fund flows, dampening sentiments.

"We retain a degree of caution on the outlook for first-half flows," Chief Executive Manny Roman said in a statement.

"Whilst we have a reasonable pipeline of sales ... recent market volatility reminds us of the uncertain macro (economic) environment in which we operate and its potential impact on demand for our products."

Its shares initially rose in a wider financial sector rally after UK national elections delivered a majority to the right-of-centre Conservatives, but were down 2 percent by 1150 GMT.

Hedge funds globally are under pressure to show consistent performance and manage volatility, most recently due to a bond market selloff that has led to losses for some strategies.

The shares have weakened on the back of "the headline outflow situation and cautious outlook even though performance in their funds have been strong", said Pras Jeyanandhan, an analyst at Berenberg.

RECORD ASSETS

The milestone reflects Roman's strategy to cut reliance on its computer-driven AHL funds, whose lacklustre performance helped lead to a near 90 percent collapse in Man shares between 2008 and 2012.

The company has acquired five money managers since the start of 2014, expanded its presence in the United States and hired several fund managers for its GLG unit to diversify product offerings.

Shares have risen but remain 67 percent below their peak.

The FuM total included $2.4 billion from its acquisitions of NewSmith and the fund of funds business of Bank of America Merrill Lynch.

Assets of its quantitative hedge funds, based on mathematic trading models, rose 18 percent as they made money and attracted net inflows. Its GLG unit also added 19 percent to assets, primarily due to the acquisition of Silvermine, but suffered outflows worth $600 million.

"Despite net outflows being higher than anticipated and AHL's recent selloff, we view today's statement positively as FuM continues to grow and two acquisitions completed post the quarter end," RBC Capital Markets analyst Peter Lenardos wrote.

The company is searching for a new chairman after saying Jon Aisbitt intends to step down in May 2016. (Editing by Sinead Cruise and Ruth Pitchford)