Portugal GV Fund Comparison?

Has anyone looked into the Sustainable Innovation Fund from Grosvenor?

Hi Kevin,

I would definitely choose those ā€œpublicly traded investment fundsā€ instead of VC funds. Because they are safe, have a long history and very very easy to sell.

Butā€¦ When someone subscribe those funds, they buy shares from other shareholders (you, me or Mr. GonƧalves) who sell their shares on the stock market. So, the money goes to the individual who sells shares, not to the company. That definitely does not capitalize any company. When you buy Apple shares, do you think your money capitalizes Apple? It is better than nothing for Portugal but I would consider it ā€œcapital transferā€. On the other hand, VC funds really inject capital to the companies.

I think ā€œinvestment fundā€ term is a much broader term and there may be funds in ā€œcapitalizing natureā€. Even those VC funds can be considered a kind of ā€œinvestment fundā€.

And yes of course you can sell your units if application is rejected but as you know, rules are changing at 1st January and you may lose the chance for 350K option.

In a technical and literal sense you are correct that buying listed shares on the stock market does not capitalize a company (the company is capitalized when it does the IPO). However, I think this is splitting hairs. If all of the investors sell their shares and no one buys them, the price will plunge and the company has no market for its securities. Again, this doesnā€™t affect the capitalization of the company but it does undermine liquidity and the ability of the company to continue to raise capital in the future.

I would think the PT government would WANT to encourage investment in listed companies as it helps the entire economy and country, even if it may not literally meet the exact definition of the law. This is the same argument others have made for real estate VC funds. The fund investments are less than 10% of all GV applications. In the large picture it is not a big deal. Why would the government want to kill the goose that lays the golden egg, so to speak when it will discourage investment in the country at a time when it is desperately needed to bounce the economy back.

From the data, you can see that there are only about 10 GVs a month using the fund route (less than 10%). It would be easy for the government to clarify and update the rules for new applications effective 1/1/2022 if this is really a problem. But I donā€™t really see any issue here.

Hi Joe, was the process for obtaining the certification of investment from the IMGA Acoes fund straightforward? It seems that the equity funds provide that necessary paperwork for the GV application, so I was wondering how that went for a publicly-traded fund purchase. Many thanks for the information!

@jccarraway Yes. Very easy. Bison Bank wrote the letter to my lawyers the day after the fund was purchased. It detailed transfer amounts, number of shares, passport number, etc. Also stated that it was for the GV and the amount that it satisfied.

1 Like

A post was merged into an existing topic: Golden Visa Funds in Portugal - The BIG Questions

Hi all,

The 2 stock market funds mentioned sound interesting. For US investors, is anyone aware of whether or not they provide a PFIC statement? Even if not it could still count for the Mark to Market approach I assume.

Thanks.

B2D2

@B2D2 we were told the statement will be loaded to our bank portal for US taxes.

Iā€™m afraid I donā€™t see ā€œDunas Capitalā€ or ā€œNestā€ in the list? I do see ā€œNextā€?

Forgive me Iā€™m new to this.

Thanks,
Curtis

Nest is now Next by Lynx Asset Capital

Dunas can be found at https://www.goldenbridgefund.com/

I did invest with Nest, but honestly it has been difficult to understand their plan due to the pandemic.

Next is managed by Opylon Krea, correct?

What do you mean by understanding their plan? I understood it was a pure play in high street retail real estate. I assume their play now is to buy distressed retail and lease it short term until tourism returns and then enter into long term leases at higher rates.

Can you say whether they are performing well or not so far?

Nest is managed by Lynx Asset Mnagers and the Fund advisor is Optylon Krea.

Due to Covid, they are maintaining a large cash position waiting for the right opportunity to purchase something.

I donā€™t think they are alone in that regard by any means. When I was first interviewing funds it appeared that they understood their mandate was foremost to preserve capital. I was unsure whether they really intended to do that but from what I have seen that is indeed the case.

If we closely look into the text of the law, a qualifying fund investment should have the following conditions:

1- Transfer of capital in an amount equal to or greater than ā‚¬ 350,000,
2-acquisition of units in investment funds or venture capital funds
3-fund should be constituted under Portuguese legislation
4- fund maturity , at the time of the investment, be at least five years, and
5- at least 60% of the value of the investments be made in commercial companies based in Portugal.

Now, the question is how does an exchange traded fund satisfy No.4 above?

The fund managers and the bank may say their fund qualifies, but how do they address this specific question?

1 Like

My Google translation of the law is ā€œmaturity of at least 5 yearsā€. The prospectus of the IMGA states that the ā€œfund was authorised by [CMVM] for an indefinite duration.ā€ An indefinite duration is > 5 years.

As I have said, I think people are taking the qualification requirements too literally. This is just a wild guess on my part, but I donā€™t think SEF really is aggressively scrutinizing every aspect of the app and hunting for ways to reject an application, for example you forgot to initial section 3. SEF will AFAIK verify your investment every 2 years to ensure you are still invested if you want to renew, and if you no longer have the investment you cannot renew your GV. Thus I imagine this requirement is not intended to force you to be in an investment for 6 years but rather a way to weed out non-compliant investment choices.

1 Like

I was hoping to just make back the rate of inflation and considered this dead money for the next 5 years. I was just trying to avoid making someone else rich because I need them to get the Golden Visa. .

Iā€™ve added Lince Innovation (not Lince PT Innovation) to the Google Sheet.

1 Like

Thanks for the quick response Michael! Iā€™m just now looking into GV/Portugal. Mind if I pick your brain from time to time?

Be safe!

Curtis R. Markham, M.D., DABAM, DABA, FASAM

Was all set to go the PE fund route but upon hearing about these Index fund options, would like to learn more. Would also be interested in a contact at BPI to discuss the fund and bank account setup. Pls PM if youā€™d prefer not to share publicly. Thanks!