Q: Talk us through the Golden Visa fund landscape in Portugal at the present moment
A: Presently, there are 30+ funds across the Golden Visa landscape. Broadly speaking the bulk of funds are focussed on real estate, with a minority focussing on traditional early stage venture capital investing. Obviously, the two are very different propositions in terms of underlying asset class, risk/return profile, and overall objectives.
Q: At a high level, how do these funds differ?
A: For those investors who are more risk-averse, where capital preservation is an objective first and foremost, real-estate funds tend to be the go-to. These funds broadly range from having low single digit returns to high single digit returns. Real estate funds also tend to pay a yield through the life of the fund.
For those investors that are more risk-loving, they look more at the traditional early-stage company investing, where there is often the possibility of double-digit returns, but also a very real risk of losing the principal. Remember no returns are guaranteed.
Q: What is the sentiment of your clients presently?
A: I have seen a real shift in sentiment over the past 3-4 months. Many more clients are seeing their Golden Visa investment as an extension of their wider financial portfolio. They are allocating capital to Portugal as part of a wider balanced financial portfolio; clients are diversifying their portfolio through investing in asset classes in a new geography which is rooted by different market fundamentals than previous investments.
Capital preservation has always been a priority for many of my clients, especially given growing geopolitical concerns and volatility in public markets. However, given rising inflation globally, investors are definitely becoming more conscious in seeking returns which will maintain the purchasing power of their investment throughout the fund-term. In layman terms, clients are looking for both a relatively safe investment in a stable asset class, but also are very much conscious of rising prices globally. Clients are definitely beginning to see this as an investment first and foremost, with the bonus of a Golden Visa.
Q: What would you advocate in these circumstances?
A: In these cases, I would always advocate for a balanced fund. Funds which are considered ‘balanced’ tend to pose less risk given there is diversification across developer, asset class, acquisition strategy, geography, currency and other facets. A fund which has an allocation across these facets does well to mitigate possible risks and offers downside protection for investors. Funds which hold single developments by a single developer can be very risky.
However, it is a fine line – funds should also not be investing across too many different areas, this can cause ‘over-diversification’, where the Management Team lack conviction and the investment strategy can seem confused. As a result, upside returns can be capped. One fund, in my view, which gets this diversification balance right is the EQTY Capital fund. In my view, this fund has an intrinsic understanding of what investors are presently looking for.
The information above is general in nature and should not considered financial advice.
If you would like a bespoke consultation on the Golden Visa process, please get in touch with Kurran Sachdeva at firstname.lastname@example.org
Q&A with Kurran Sachdeva, Managing Partner at Valerio Partners, an independent consulting company specialising in the residency-by-investment programmes in Europe.
The views expressed on this page are those of the author and not of The Portugal News.