(Corrects last sentence to say dividend was 26 cents, not 35 cents)
NEW YORK, April 27 (Reuters) - Private equity firm Carlyle Group LP bucked its sector's trend on Wednesday by posting first-quarter earnings that beat market forecasts, even as it reported a drop in the assets managed by the firm that also set it apart from its peers.
The surprisingly buoyant earnings numbers contrasted with disappointing quarterly performances from some of Carlyle's rivals, as stormy financial markets eroded returns.
Known for multibillion dollar corporate takeovers that were in vogue before the 2008 global financial crisis, the U.S. private equity industry has had a slow start this year after investor aversion to risk reduced funding for buyouts.
Carlyle said it earned an economic net income (ENI) of $58.2 million after taxes, or 18 cents per share. That marked a 78 percent drop in total earnings compared with a year ago, but still better than analyst forecasts for ENI of 12 cents per share.
ENI is a crucial performance measure for U.S. private equity firms as it accounts for unrealized investment gains or losses, which may never materialise as buyout companies can hold their investments for up to 10 years or more. This allows them to sell at prices markedly different from those today.
Still, volatile financial markets have been a headache. Blackstone Group and KKR & Co LP -- Carlyle's peers -- both reported earnings that missed market forecasts earlier this month as sharp falls in asset prices eroded returns.
Carlyle's performance indicated it was not immune to choppy markets either but weathered fluctuations better.
Its performance fees, or fees earned by Carlyle after generating returns for its clients that are in excess of an agreed level, edged up 1.6 percent to $1.3 billion between January and March compared with the previous three months.
The modest growth in fees was led by gains in Carlyle's buyout and real estate funds, which rose 1 percent and 8 percent respectively in value. In contrast, the value of its energy and natural resources funds shrank between 2 percent to 3 percent.
Despite the moderately upbeat earnings report, Washington, D.C.-based Carlyle said the pool of cash that it managed shrank 8 percent on a yearly basis to $178 billion. That was partly due to Carlyle returning some cash to investors, and as some clients withdrew their funds.
Carlyle paid a dividend of 26 cents per share for the first quarter. (Reporting by Koh Gui Qing in New York)