The long-awaited Portugal Golden Visa changes came into effect on January 1, 2022 and were quickly digested by investors.

While the demand for real estate acquisition is stable, investment funds also continue to gain popularity despite the revised investment amount.

One thing is certain: the funds are here to stay. Investors become familiar with this option and learn how to evaluate funds and fund managers. In previous years we have published pioneering guides on choosing the right funds in Portugal. We thought an updated quick guide to Portugal Golden Visa funds would be helpful for those who are still weighing their options before taking the plunge.

What makes a fund eligible for Portugal Golden Visa

An eligible Golden Visa fund must be registered with the Portuguese Securities Market Commission (CMVM). In addition, they must allocate at least 60% of their investments to Portugal.

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

A fund registered in Portugal is regulated by three different bodies:

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

The funds are also audited by the Portuguese tax authorities. Thus, when you invest in a fund, you are making a highly regulated investment that complies with legislation and tax laws.

Highlights Portugal Golden Visa Investment Funds

Besides the obvious benefits that come with a Portugal Golden Visa, such as a residence permit and a pathway to citizenship, investing in funds offers many advantages.

● Investing funds can easily be done remotely, unlike real estate investing which usually requires physical inspection
● Investing in a fund can result in significant tax savings depending on the fund and your tax residency status. In certain situations, withholding tax on income generated by the fund can be avoided, especially if you are not a tax resident in Portugal.
● Annual dividends and potential capital appreciation can be significantly higher than other investment options associated with the Golden Visa program, depending on the objective of the fund.

Who prefers to invest in Portugal Golden Visa funds
Although the scope is very broad, there are some typical characteristics of Portugal Golden Visa fund investors. These are usually:

● Financially savvy investors not obsessed with tangible assets
● Investors from the United States, who have experience with venture capital funds and other types of financial investments
● Investors who want to diversify their investments across a portfolio of assets, investments and funds
● Investors who wish to delegate the management of their investments to regulated professionals
● Investors who do not want to deal with property management

Types of investment funds Portugal Golden Visa

Fund type

Real estate funds, securities funds, venture capital funds.

Investment strategy

Real estate funds: Residential, agricultural, commercial real estate, etc.

Securities funds: shares

Venture capital funds: Startups and other companies

The typical return on investment with Portugal Golden Visa funds
Although the target annual return of investment funds varies from fund to fund, expected returns generally range from 3% to 10%. Some funds give annual dividends, while others accumulate and distribute profits upon exit. Some funds do both.

Are Portugal Golden Visa funds risky?
Needless to say, an investment, whether it is real estate or funds, involves a certain degree of risk. But it also depends on your risk appetite and the type of fund you invest in.

Real estate funds for risk averse investors
If you consider yourself a risk-averse investor and want to retain the value of your investment, you can check out the Portugal Golden Visa funds which include real estate funds. These funds invest “indirectly” in real estate, which would retain a certain value no matter what happens in the market. Beware, however, of conflicts of interest in this category. For more information contact us.

Startups for risk-tolerant investors
There are funds that focus on startups or companies in specific sectors if you are the type of investor who is willing to take industry risks. If all goes well, the value of the portfolio company in which these funds invest can generate handsome returns. However, the worst case scenario is also viable and you risk losing your capital.

How to Choose the Right Portugal Golden Visa Fund
I realize that investing in funds may seem complex, but it doesn’t have to be. Here’s what I recommend to potential investors I talk to.

Step One: Determine Your Risk Appetite

Before you can invest in a fund, you really need to know how much risk you’re willing to take. This will help you assess the funds from a ‘risk’ perspective and steer your investment accordingly.

Step Two: Examine the Funds Carefully

As I said before, Portugal Golden Visa funds have different investment strategies. Once you have decided on your preferred objective, you can shortlist the funds and talk to the relevant fund managers. This is where the help of a professional becomes vital because there are certain points to watch out for.

Basically, there are a few things to consider when looking at a fund:

● Funds that have not yet raised enough capital to make investments
● Real estate developers pushing their own developments through a fund

But how do you avoid them and make sure you’re not pushed into certain products? After tons of meetings with potential investors and reviewing over 30 funds, I’ve formulated the questions below that you should keep in mind when evaluating funds and talking to fund managers:

● What is the purpose of the fund? Discover the asset class and geography of real estate; industry and investment stage for business
● Will you receive dividends? If so, what is the frequency?
● What is the investor profile?
● What fees will you have 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 are going to invest a large sum and as the saying goes, there is no such thing as a stupid question.

What else do you want to know
With over 30 funds on the market, it is more important than ever to do a detailed analysis and assessment before deciding which funds to invest in. Working with independent advisors will be of great help to you as they are objective and have the same distance from every fund in the market while looking out for your best interests.

We have been able to help hundreds of fund investors from almost 30 different nationalities. We’ve helped our investors collectively subscribe to more than 18 funds over the past year.
If you still have unanswered questions about Portugal Golden Visa investment funds, please do not hesitate to contact us at [email protected]