While the demand for real estate acquisition is steady, investment funds also keep increasing in popularity despite the revised investment amount.

One thing is for sure: funds are here to stay. Investors are becoming more familiar with this option and they’re learning how to assess funds and fund managers. In previous years, we published pioneering guides on choosing the right funds in Portugal. We thought a quick updated guide on Portugal Golden Visa funds would be helpful for those who still weigh their options before taking the plunge.

What Makes a Fund Eligible for Portugal Golden Visa

An eligible Golden Visa fund is required to be registered with the Portuguese Securities Market Commission (CMVM). Also, they should allocate at least 60 percent of their investments in Portugal.

The minimum fund investment amount to qualify for a Portugal Golden Visa is €500,000.

A registered Portugal fund is regulated by three different bodies:

1. The Portuguese Securities Market Commission (CMVM)
2. The Bank of Portugal
3. The external fund management company

The funds are also audited by the Portuguese Tax Authorities. So when you invest in a fund, you make a highly-regulated investment that complies with the legislation and tax laws.

Highlights Portugal Golden Visa Investment Funds

Apart from the obvious benefits that come with a Portugal Golden Visa, such as a residence permit and a route to citizenship, the fund investment offers many advantages.

● Fund investment can easily be made remotely, unlike property investment which typically requires physical inspection
● An investment in a fund may result in significant tax savings depending on the fund and your tax residency status. In some situations, withholding tax on the income earned by the fund can be avoided, especially if you’re not a tax resident in Portugal.
● Annual dividends and eventual capital appreciation may be much higher than other investment options associated with the Golden Visa program, depending on the fund's objective.

Who Prefers To Invest in Portugal Golden Visa Funds
Although the scope is very wide, there are some typical characteristics of Portugal Golden Visa fund investors. These are usually:

● Investors who are financially savvy and not obsessed with tangible assets
● Investors from the United States, who are experienced with venture capital funds and other types of financial investments
● Investors that want to diversify their investment across a portfolio of assets, investments, and funds
● Investors that are seeking to delegate the management of their investments to regulated professionals
● Investors who don’t want to deal with property management

Types of Portugal Golden Visa Investment Funds

Fund Type

Real Estate Funds, Securities Funds, Venture Capital Funds.

Investment Strategy

Real Estate Funds: Residential, agricultural, commercial real estate, etc.

Securities Funds: Stocks

Venture Capital Funds : Startups and other companies

The Typical ROI With the Portugal Golden Visa Funds
While the annual target return for investment funds varies from one fund to the next, the expected returns usually range from 3 percent to 10 percent. Some funds give annual dividends, while others accumulate and distribute earnings at the exit. Some funds do both.

Are Portugal Golden Visa Funds Risky?
Needless to say, an investment, either property or funds, involves some degree of risk. But this also depends on your risk appetite and the fund type you invest in.

Real Estate Funds for Risk-Averse Investors
If you consider yourself a risk-averse investor and want to hold the value of your investment, you can check the Portugal Golden Visa funds that include real estate funds. These funds invest “indirectly” in real estate properties, which would preserve a certain value, no matter what happens to the market. Watch out for conflicts of interest in this category, however. To learn more, contact us.

Startups for Risk Tolerant Investors
There are funds that focus on startups or companies in specific industries if you are the type of investor who is willing to take industry risks. If all goes right, the value of the portfolio company these funds invest in may bear handsome returns. However, the worst scenario is viable too and you might lose your capital.

How To Choose the Right Portugal Golden Visa Fund
I’m aware that investing in funds can sound complex but it doesn’t have to be. Here’s what I recommend to the prospective investors I speak to.

First Step: Decide on Your Risk Appetite

Before you can make an investment in a fund, you really need to know how much risk you’re willing to take. This will help you vet the funds from a “risk” perspective and steer your investment accordingly.

Second Step: Vet the Funds Carefully

As I previously said, Portugal Golden Visa funds have different investment strategies. Once you decide on what your preferred focus is, you can shortlist the funds and speak to the relevant fund managers. This is where getting professional help becomes vital as there are some points to watch out for.

Basically, there are a couple of things to beware of when you’re vetting a fund:

● Funds that have not yet raised enough capital in order to proceed with investments
● Real estate developers who are pushing their own developments through a fund

But how do you avoid these and make sure you’re not being pushed to certain products? After tons of meetings with prospective investors and vetting over 30 funds, I’ve come up with the below queries you should have in mind when assessing funds and speaking to fund managers:

● What is the fund's focus? Find out the asset class and geography for real estate; industry and investment stage for companies
● Will you get dividends? If yes, what is the frequency?
● What is the investor profile?
● Which fees will you be expected to pay?
● Who audits the fund?

These are the most basic questions that need to be addressed. Feel free to ask as many questions as possible. You’re going to invest a significant amount and as the saying goes there is no such thing as a stupid question.

What Else You Need To Know
With more than 30 funds on the market, it’s more important than ever to do a detailed analysis and assessment before you decide on which funds you’ll invest in. Working with independent advisors will be a great help as they’re objective and have equal distance from each fund in the market while looking out for your best interest.

We were able to help hundreds of fund investors from close to 30 different nationalities. We helped guide our investors to subscribe to more than 18 funds collectively within the last year.
If you still have unanswered questions on Portugal Golden Visa investment funds, please feel free to contact us at team@getgoldenvisa.com.