The world's wealthiest families plan to allocate more money to private equity after the asset class helped drive an average 15.5 per cent rise in the value of their investments in 2017, according to a survey.

Some 311 family offices - set up to manage the wealth of one or more rich families - took part in the survey, conducted by Swiss bank UBS, whose wealth management arm manages around $2.5 trillion in assets, and Campden Wealth.

The strong gains in 2017 followed an average return of 7 per cent in 2016 and were driven by developed and developing market listed equities, which returned 23 per cent and 38 per cent, respectively, and private equity, which returned 18 per cent, the survey showed.

For 2018, the family offices expected their direct venture capital and private equity investments to deliver the best returns, of 13 per cent, followed by private equity funds, at 11 per cent, and direct real estate investments, at 8.4 per cent.

"Family offices have delivered their strongest returns since we began measuring their performance five years ago," Sara Ferrari, head of UBS' Global Family Office Group, said.

"This reflects the bull market, as well as family offices' ability to take a long-term approach and embrace illiquidity."

Private equity investments typically involve locking money up in a venture for many years, as opposed to listed equity markets which can be sold quickly.

The average portfolio, worth $808 million, was allocated 28 per cent to listed equities, including 6 per cent in developing markets. Sixteen percent was in fixed income, with 46 per cent in so-called 'alternatives' like private equity and real estate.

A further 3.3 per cent was in commodities, while 7 per cent was in cash, the survey showed.

Allocations to hedge funds, however, continued to be trimmed and represent just 5.6 per cent of the average portfolio after several years of weak average performance and high fees relative to those run by traditional asset managers.

The favourite style of hedge fund for those who did invest was long-short equity, which can bet on both rising and falling share prices, at 19 per cent. Global Macro, which bets on macroeconomic trends, was second most popular, at 13 per cent.

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