Cautious outlook takes shine off Man Group's results

* Reports 62 pct jump in pretax profit to $481 mln

* Acquisitions boost assets to $72.9 bln, up 35 pct

* Flags share buyback worth $175 mln

* Shares (Frankfurt: DI6.F - news) down 1 pct (Adds details, background, share reaction, quote)

By Nishant Kumar

LONDON, Feb 25 (Reuters) - A cautious outlook overshadowed fund manager Man Group (LSE: EMG.L - news) 's results on Wednesday, even though the firm raised its dividend and share buyback plans and beat full-year profit forecasts thanks to reduced costs and a rise in performance fee income.

Since taking over in 2013 Chief Executive Manny Roman has looked to restructure the world's biggest listed hedge fund firm after a near-90 percent collapse in its share price.

To reduce reliance on the computer-driven AHL funds that led to that fall, he has expanded the firm's product offering through acquisition, helping its shares rise 150 percent, even though they remain 71 percent below their all-time high.

While investors were continuing to put money into the firm's funds, with net inflows of $3.3 billion last year, compared with outflows of $3.6 billion in 2013, broader market volatility meant it was cautious about near-term demand.

"Despite the strong performance across the AHL range in 2014 we do not expect to see a meaningful pick-up in demand for these products until later in the year," Roman said in a statement.

"Coupled with a slowdown in sales across our discretionary strategies and the ongoing volatility of the markets in which we operate, that means that we remain cautious in our near-term outlook," he added.

The AHL hedge funds recorded one of the best returns in the $3 trillion industry last year, with the $4.4 billion AHL Diversified gaining 32 percent and the $4 billion AHL Evolution fund returning 20 percent.

As at the end of January, 74 percent of its AHL performance fee-eligible funds managing $10.6 billion were above the 'high water' mark - the level above which it can earn performance fees. It's GLG unit was doing less well with only 14 percent of performance fee-eligible funds above high water mark.

While Man's shares opened higher on the results, they gave up early gains to trade down 1 percent at 189 pence by 1149 GMT, when the FTSE 100 index was down 0.3 percent, with analysts saying the cautious outlook had caused the fall.

MAN (Swiss: MAN.SW - news) reported an adjusted pretax profit of $481 million for 2014, the highest in five years and a 62 percent jump from 2013, beating the consensus market forecast of $419 million.

Investment gains of $3.6 billion combined with the net inflows to boost the firm's assets under management, offsetting a $4.3 billion hit from foreign exchange movements during the year.

Total (Swiss: FP.SW - news) assets under management rose 35 percent to $72.9 billion, also boosted by four acquisitions including the U.S. fund manager Numeric which added $16.7 billion of assets.

"Man's ongoing acquisitions are a compelling use of its surplus capital which is generating a return close to zero," RBC Capital Markets analyst Peter Lenardos said in a research note.

The firm agreed to buy money manager NewSmith last week, it's fifth acquisition in the last year.

The firm proposed a final dividend of 6.1 cents per share, raising the total dividend for the year to 10.1 cents from 7.9 cents last time.

It also said it would buy back $175 million worth of its shares. Last year it said it planned to buy back $115 million of its shares. (Editing by David Clarke and Greg Mahlich)