Man Group, the world's biggest listed hedge fund manager, reported a second consecutive quarter of heavy client outflows and announced plans for further cost cuts, as nervous investors pulled out of its poorly-performing flagship fund.

The company, which shocked investors in September when it reported its fastest rate of outflows since early 2009, said on Wednesday clients pulled out a net $2.5 billion over the three months through December, roughly in line with analyst forecasts. 

"We are seeing investors respond to performance and market sentiment," chief executive Peter Clarke told reporters, adding net outflows slowed last month and were "markedly less than a third" of total outflows for the quarter.

Man, whose shares rallied 5.2 percent to 112.5 pence by 0842 GMT having slumped from around 300p a year ago, also said it would cut an extra $75 million from costs on top of previously-announced savings of $40 million.

Clarke said the cuts, which amount to around 10 percent of Man's cost base, would be made across the board and would involve job cuts, although he declined to give further details.

"(The) numbers (were) bang in line with reduced expectations, but cost savings are an unexpected positive," said Citi analyst Haley Tam in a note.

While outflows slowed at Man's GLG unit, which it bought for $1.6 billion in 2010, its flagship computer-driven fund AHL saw clients exit after weak performance.

The $21 billion fund, which is named after 1980s founders Michael Adam, David Harding and Martin Lueck and which tries to make money following market trends, lost 6.4 percent in 2011.

In contrast, Winton Capital, a rival to AHL which was also set up by Harding after he left AHL and which now runs $28 billion in assets, saw its main fund gain 6.3 percent last year.

Man's total assets under management fell to $58.4 billion at end-December from $63.5 billion at end-October. Man also said GLG founder Noam Gottesman has stood down as co-CEO of GLG and taken the role of non-executive chairman of GLG's business and interests in the United States.

"He has his own personal interests he wants to pursue," said Clarke. "He continues to be active in the US business." - Reuters