* Q4 EPS C$0.34 vs analysts' estimate C$0.35
* Revenue, assets fall, expenses rise
* Shares fall 5.2 pct to C$17.88 (Recasts with comments from analyst and CEO, stock move)
By Cameron French
TORONTO, Jan 28 (Reuters) - AGF Management Ltd's (AGFb.TO) quarterly profit dropped by nearly a third, falling just short of estimates and prompting investors to sell the asset manager's shares down by more than 5 percent on Friday.
AGF, which agreed in November to buy Acuity Funds Ltd for C$325 million ($325 million), earned C$31 million, or 34 Canadian cents a share, in the September-November period.
That result just missed analysts' estimate of a profit of 35 Canadian cents a share, and compared with a year-before profit of C$45.5 million, or 50 Canadian cents a share.
Revenue fell 1.1 percent to $155.9 million, while total expenses rose 4.3 percent to $89.8 million.
Analysts said the results were on balance a bit disappointing, but said they alone didn't justify the sharp stock retreat.
Scott Chan of Canaccord Genuity said the share-price drop was likely exaggerated by the fact that AGF's shares have been rising sharply since September despite a middling sales performance by the company.
"You saw the stock rally in the fourth quarter, but there really wasn't much reason to do so. The market was doing well, but their assets under management and assets weren't reflecting it," he said.
AGF is hoping the acquisition of Acuity can help break a string of nearly three years of consecutive monthly net fund redemptions. Assets under management over the past year retreated by 3.6 percent to C$43 billion.
"We continue to work hard to turn redemptions around and the acquisition is part of our overall growth strategy," AGF Chief Executive Blake Goldring said on a conference call.
He added that AGF's equity-focused product lineup should benefit from a gradual shift towards equity funds from fixed income funds this year.
AGF is one of several Canadian wealth managers that have been bulking up in recent months.
In the most notable moves, Bank of Nova Scotia (BNS.TO) is in the process of closing a C$2.3 billion acquisition of DundeeWealth (DW.TO), while Royal Bank of Canada (RY.TO) bought British fund manager BlueBay Asset management for US$1.5 billion.
AGF's shares were down 98 Canadian cents, or 5.2 percent, at C$17.88 on the Toronto Stock Exchange on Friday afternoon.
$1=$1.00 Canadian Additional reporting by Arnika Thakur in Bangalore; editing by Peter Galloway