Och-Ziff Capital Management Group, (NYSE: OZM), the publicly traded hedge fund firm, said its first quarter 2009 loss was down to $81.9 million from a $268.1 million loss in the first quarter of 2008.

Assets under management were $20.3 billion as of April 1, an 8% drop from January 1, and a 38% drop from the same time last year, the firm said in a statement.

Nevertheless, firm founder and Chief Executive Officer Daniel Och said he sees a general improvement in the investing environment.

“In terms of investor appetite from the direct institutional side, pension funds, we think that there is going to be strong interest for that group in the absolute return hedge fund space,” Och said on a conference call.

Och said the firm would continue to focus on real estate in the U.S. and Asia, energy and emerging markets.

With the exception of its European fund, which was down 0.16% year-to-date, Och-Ziff’s funds were in the black. Its flagship fund was up 4.36% YTD, while the Asia-focused fund was +4.35% YTD and its special situations fund +0.70% YTD.

Och didn’t say whether the firm would get involved in any of the public-private partnerships being touted by the Obama administration as a financial cure-all for distressed assets.

“We judge them like anything else,” Och said.” If the risk return is positive, we pursue it. If not, we don’t.”