March 9, 2017 / 6:26 PM / a year ago

UPDATE 1-Assets held by Brazil wealth managers surge last year, Anbima says

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By Bruno Federowski

SAO PAULO, March 9 (Reuters) - Brazilian wealth managers saw assets under administration increase by more than one-fifth last year, when growing confidence in a recovery in Latin America’s largest economy drove the strongest interest rate, currency and stock rally in seven years.

Assets under management rose 20.7 percent to 90.1 billion reais ($28.3 billion) last year, with fixed-income products accounting for nearly half of all investments, industry group Anbima said in a report on Thursday.

Even as Brazil’s interbank interest rates averaged 14 percent - the highest among the world’s top 10 economies - equity investments rose as a share of total assets for the first time since at least 2014, the Anbima report showed.

Borrowing costs in Brazil, which touched single-digits for a short period between 2012 and 2013, have for long lured government bond investors, subtracting pace from equity and other alternative investments.

Brazil’s benchmark Bovespa stock index jumped 39 percent in 2016, boosted by hopes that President Michel Temer would curb public spending following the ouster of his leftist predecessor, Dilma Rousseff.

In a conference call, Anbima director Ricardo Ziliotto said he expects positive trends to continue in the coming year as Temer advances on an agenda to cut pension, labor and budget largess, which could lead rates to fall further.

“The industry is moderately optimistic, as we can tell not only by the figures but also by meeting with clients,” he said.

Equities and cross-asset funds, which can invest in a diverse range of products, are likely to benefit the most from the rebound, Ziliotto added.

Major cross-asset funds have closed off to new entrants in face of surging demand, while others have opened new vehicles to capitalize on the trend. ($1 = 3.1797 reais) (Editing by Guillermo Parra-Bernal and Jonathan Oatis)

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