ASSET management companies will normally manage tailor-made portfolios for those people who invest at least US$100,000 (HK$780,000). As well as benefitting from personal advice, private clients pay less commission than they would if they invested in stocks, bonds or unit trusts. Most unit trust companies charge a five per cent initial fee and a one per cent annual management fee. But private clients normally pay an annual management fee of a few per cent. For those who can invest US$100,000, firms will construct a diversified portfolio using unit trusts. But, if the client prefers stocks and bonds, the absolute minimum is US$500,000. According to Schroders Investment Management's managing director, Richard Haw, the minimum amount really needs to be a couple of million dollars. Even then, parts of that portfolio might be better off invested in unit trusts. Once someone decides to ask a company to construct a portfolio, there is a lengthy consultation process when the client's investment objectives will be discussed. 'Sometimes the money can be that which they never expected to have, so they might take an enterprising approach to try to double it,' Mr Haw said. 'For a low-to-medium-risk client who was handing over a substantial part of his wealth and needed regular income, we would probably put from 30 to 50 per cent in bonds, 40 to 60 per cent in equities and might hold up to 20 per cent in cash. 'But another client might only give us a small part of his overall wealth and might want a higher risk portfolio which would achieve maximum capital gains. 'For this client, we might invest from 60 to 100 per cent in equities with the rest in cash and nothing in bonds.' Jardine Fleming normally requires US$500,000 to manage a diversified private portfolio of stocks and bonds, though it will accept smaller amounts if the client is prepared to invest in unit trusts. 'Many of our clients are very happy to allow us to use unit trusts to structure their portfolios but there are others who have a preference for owning shares,' director Paul Armstrong said. 'Only after understanding the client, can you give them what they want.' Chase Asset Management requires a minimum of US$1 million before it will construct a tailor-made portfolio, though the average size of its private client portfolios is around US$5 million. 'We discuss investment objectives, then build a portfolio that best suits a client's needs,' said the firm's chief investment officer, Kevin Colglazier. 'These range from one client who wants all his money in bonds, to another who wants it all in stocks and someone else who wants a balanced portfolio with 50 per cent each in stocks and bonds.' With personal wealth rapidly increasing in Hong Kong, the private client business for companies like Chase is expected to grow considerably. Traditionally, in Hong Kong, unlike in the United States and Europe, wealthy individuals have steered clear of professional managers, preferring to invest cash themselves. But attitudes are changing. 'More people are becoming willing to give money to professional managers to invest for them,' HSBC Asset Management director John Cheung said. 'They know that markets are very volatile and there are now so many investment products available which they don't understand. So, they realise that it's better to get some professional to invest for them,' he said. HSBC Asset Management will construct a diversified portfolio for those investing at least US$1 million. 'If you are in your mid-30s, then you can afford to take a higher risk and maybe will want to have a portfolio of 100 per cent equities with a bias towards the Asia-Pacific region,' Mr Cheung said. 'But, if you are 65, are retired, have a lump sum to invest and want to get some income, then we can tailor a conservative portfolio, perhaps 40 per cent in equities and the rest in fixed income and currency deposits. 'The benefits of being a private client are that you get personal advice, a tailor-made portfolio and a professional fund manager to invest the money. 'The initial commission charges are also only around one, or one and a half per cent, compared to the five per cent on a normal unit trust.'