UPDATE 3-Polar Capital hedge fund manager Barnett to leave

(Adds CEO comments, further details and analyst comment)

LONDON, Jan 14 (Reuters) - Polar Capital (POLR.L) Holdings Plc said on Wednesday that Julian Barnett, who manages about one third of the company's assets through Polar Capital Paragon Fund Ltd, has resigned.

The fund management firm said Barnett had decided to leave for personal reasons, and would continue to manage the fund until it was wound down and assets returned to investors.

Polar Capital Holdings' shares were down 5.9 percent at 46.25 pence at 12.13 GMT.

Paragon's performance in dollar terms was 17.9 percent in the year to Nov 28 and 5.75 percent in the month to that date.

The fund management firm said the departure was amicable and that Barnett, who set up the Paragon fund in 2004, would take a break from fund management.

At the end of November 2008, the long/short hedge fund had $875 million in assets invested by institutions, about one third of the company's total assets under management (AuM) which at the end of November stood at $2.5 billion.

"We see this as material bad news for Polar," said analyst Catherine Heath of Altium Securities.

"Assets under management, once Paragon is fully wound up, are now likely to be below the $2 billion level indicated as break even for core profit," the analyst said.