As the other thread on funds (Portugal GV Fund Comparison?)
is already very long and many of the discussions on specific funds out of date, I thought I’d start a new fund thread for 2023.
A few questions on funds:
Open-ended vs closed-ended: Are open-ended funds eligible for the fund investment route as long as you hold the investment for the 5+ years until citizenship (more like 8-9 years with current application timelines)? Or are only closed-end funds eligible? I’ve heard conflicting information about this. Obviously would prefer an open-ended fund for total control over when to exit.
Public vs private equities: Are funds that invest in public equities eligible, or only those investing in private equity and real estate? For example would an investment in IMGA Ações be eligible? Have people gotten approved with such an investment?
Switching investments: Can you switch from one fund to another during the required 5+ year holding period, or can you switch from a fund to real estate (or vice versa)? For example, if I invest in an open-ended fund now, then 3 years later buy an eligible real estate property and exit the fund (in that order so that investment minimum is maintained at all times) would that be ok?
Which fund managers have funds that are available now (Jan 2023)? I’ve looked at Blue Crow, Optimize, the STAG funds (Prima Europe and Pela Terra), ReCap, Atlantic by Lynx, and Iberis Capital. Are there others that are not on this list?
I’m invested in BPI Portugal, and have been pre-approved. NB I hear this fund hasn’t jumped through the FATCA/PFIC hoops, so is not suitable for US investors, who would need to use IMGA for an open general equity fund.
(1) yes. It doesn’t matter the form of fund, so much as that the written direction of the fund is to have portuguese assets and that it does actually have portuguese assets.
(2) yes
(3) You can change the investment, but not change the class of investment. Ex. you can buy funds, then half way through sell them and acquire other funds so long as you meet the valuations required. You cannot sell your fund and go buy a house. Sorry.
It is unclear whether, if you do change funds, you have to meet the minimums as of the time you applied, or as of the time you change, or when you renew. Probably the former but I’m unaware of any data on the matter and it’s probably subjective.
Some funds that are closed may have investors willing to sell their units. I’m one of them. If you see a fund you like, don’t discount it just because the subscription period is over. Ask the fund managers, bank, or lawyers if they know of anyone selling! Good for diversifying holdings or potentially buying at a discount.
I am deciding between the fund route or the hotel route for my GV application. I understand I am running against time here but I thought Id try my luck regardless. Wondering if you could share your reasons of using the fund route vs the alternative and which funds did you go with ? Regrets ? I am also using the search on this forum however not getting my questions answered probably due to the bad prompts. One last question, is the fund route process any easier then the others ?
I prefer to invest in things I understand, and for something of this size, the specific risk of, say, investing in some hotel, or a VC fund, seemed quite high. By contrast, investing in a Portuguese equity index fund was a small step away from what I usually invest in.
Related, I wasn’t prepared to put in weeks of due diligence to lower my risk level for a hotel-type investment.
I suspected that direct real estate investments (e.g. an apartment) would likely be overpriced, particularly as I’d be buying as a foreigner with little insight into the local market. To put it another way, I’ve invested in things in the past that were a way to achieve a particular outcome (e.g. tax treatment), and they’ve almost always been bad investments in themselves, so I have an inbuilt suspicion of schemes of that sort. I felt the index funds were different - they exist “outside” the GV.
I didn’t want to be locked into something for years, if circumstances changed. I could sell my index fund (BPI Portugal) tomorrow.
So all in, the fund offered (a) transparent costs (b) a risk/return profile I could understand, (c) speed, (d) an exit route.
No regrets.
I found the fund route very easy, and I wrapped the whole thing up in one month from a standing start. Most of that time was getting my personal documents in place. Bear in mind, I hear it’s more time consuming these days to open a bank account.
Thank you Chris, a very informative and insightful response. GV is our plan B and like all plan B’s it may never be used. As such, perhaps a less cumbersome investment vehicle maybe the way to go. Thank you again.
Not particularly, unless you really need a Portuguese index fund for some reason. Management fee is 1.2% pa which is expensive by ETF standards, and Portugal is obviously a peripheral economy I wouldn’t typically look for exposure in. The fund itself is fine for what it does, and has performed pretty well since I bought it.
Sure. Please bear in mind, BPI Portugal is not suitable for US investors for regulatory reasons.
Roughly as follows:
Get a lawyer
You or your lawyer contact BPI. I dealt with Pedro Neves Alves (pedro dot neves dot alves at bancobpi dot pt), who was great, although that was two years ago, so he may have moved on.
I sent BPI a pile of documents by email (salary confirmation, tax info, utility bill, passport copy etc, as requested). They sent their bank forms by email to sign, which I sent first by email for checking, then in final form by courier.
The account was open five days after we first contacted BPI.
I wired funds to the account.
BPI arranged the fund subscription, and this was complete two days after the account was opened.
Within a couple more days BPI supplied confirmation for SEF that I had subscribed for the fund. My lawyer then used that as part of the ARI application.
Thanks very much again, much appreciated. So it seems its best to have an account with BPI and then buy the BPI fund through them. I was thinking about spreading the investment in 2 or 3 different funds.