With the Golden Visa fund route’s minimum investment seeing an increase from EUR350,000 to EUR500,000, the market has definitely been quieter for the first two months of the year, after the craziness of Q4 last year. Given the rise in the minimum investment amount, this was to be to be expected. March has seen a substantial uptick in interest within the market as clients understandably see the huge long-term value in the Golden Visa, from both a quantitative and qualitative perspective.

One sentiment that has stayed consistent throughout is the priority of capital preservation, especially given current geopolitical concerns and volatility in public markets. Capital preservation is achieved mainly through an investment strategy with downside protection and sufficient diversification. Diversification and a ‘balanced’ portfolio that invests across asset class, development, geography, amongst other factors means that risks within the portfolio are not concentrated. If one part of the portfolio was to fall in value, successful diversification within the portfolio would ensure that the other parts would mitigate this loss. Funds which have this as fundamental part of their strategy continue to attract investors.

The second sentiment I have seen is a willingness to explore opportunities which offer ‘inflation-plus’ returns in the market. Investors are definitely becoming more conscious of rising prices globally and therefore maintaining the purchasing power of the investment throughout the fund-term is also at the forefront of conversations. Here, as part of a balanced portfolio, there are often parts of the portfolio which will look to take more risk and therefore offer higher returns. With inflation-beating returns forming a bigger part of the conversation, clients are definitely beginning to see this as an investment first, with the bonus of a Golden Visa. More often than not, the investment needs to make sense on a stand-alone basis.

Thirdly, investors are definitely focussing on funds that pay dividends through the life of the fund. Dividends offer the investor some crystallised return through the multi-year time period in which the funds are held, rather than a full pay-out at the end of the fund term. Investors like that the dividends can offer extra cash flow and are particularly useful for Golden Visa fees and when travelling to Portugal through the process.

Finally, the benefits and costs of splitting across multiple funds is something that is becoming more prominent. With Golden Visa rules allowing allocations across funds, many investors assume that this is sure-fire opportunity to spread their risk. A few years ago, I would have argued this to be correct. With most funds at that time focussing on a single asset class in a single location, a split across funds could logically be of benefit. However, as the fund market has matured, some funds have responded to this resounding client sentiment by offering a solution to this, through a balanced portfolio. This offers the investor a ‘one-stop’ solution for their Golden Visa investment. Investing across funds can cause ‘over-diversification’, where too much diversification can actually cap upside returns and yield sub-optimal results.

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, Managing Partner at Valerio Partners, at kurran.sachdeva@valeriopartners.com