Portugal GV Fund Comparison?

@dak, I’m leaning heavily into making this investment. The consolidation and efficiency improvements is a pretty compelling story. I’ve read Luz Saude’s annual report and they’re anticipating continued growth. There will probably be pent up demand for services skipped in 2020. I’ve talked to a friend who works for a US healthcare company who’s expanded into Portugal and continues to grow. He says it’s a very good market for them. Even though it’s 9/10 years, it’s a shorter timeframe to start getting your initial investment back than some other funds. Other than the lowish hurddle, I’m having a hard time finding negatives about this fund.

Hi Ravi. Thanks for reaching out. As it happens, I had a chat with them yesterday (David Pinheiro). It was a very useful chat and their approach to investment is quite interesting and well-insulated (relative to some of the out-and-out VC funds like Indico for instance). Happy to share any notes once you have had your chat. Regards, Jayanth.

Hi Ravi,
I am looking at IBERIS GREYTECH II FUND. If you are looking at the same fund, would you mind I joining you in the call?

Wow there seems to be a huge number of new funds popping up: https://nomadgate.com/introductions/golden-visa-funds/

Way more than when i first looked a few months ago. Great that there’s a lot more competition now.

Some of them like the Explorer and Portugal Gateway funds are operated by really large fund managers with hundreds of millions of euros under management. Some of them also appear to have been founded several years ago but are now just opening the fund for new (Golden Visa) investment.

I’ve met with the folks at C2 MedCapital. At first glance and with some digging, it seems to be a solid investment. It’s pretty new and any BlackBull investors are now in MedCapital. The operating partners are from Luz Saude. I still need to do more due dilligence, but I think we may be leaning this direction if everything looks good after exploring it more.

Yeah, it’s understandably just taken a lot longer for the larger funds to gear up to develop offerings into the space.

I wouldn’t be surprised to see a lot more of the flow go into funds over real estate in the future. Funds are just easier to diversify into. Might be better for the country as a whole too since the money goes into a lot more sectors instead of just driving property prices up. I’m sure there will be other consequences, of course.

Hello all :raised_hand: new in this GV search. Great community, lots of information, will read all indeed. Just a quick question; I came across a fund called Impacto Fund. I cannot attach their pdf for more information but have you ever heard about them?

I totally agree with the sentiment. The funds are a much more efficient way to invest in my opinion. There is a lot of negative sentiment about the real estate option. The real estate industry obviously wants it to stay but virtually everyone else would prefer it go away…and that seems to be the direction things are going.

In mid-2020 the funds sort of got ahead of themselves and all were chasing too few dollars. I think they have rebalanced a bit and maybe have some better offerings now. It seems odd that the front-runner in investment by far was Nest but I think probably first-mover advantage and had the momentum.

Hi,

I am just sharing one of our recent post on funds.

Venture Capital Funds - the Alternative Route to Get Your Golden Visa

With the new regulation terminating real estate investments in Lisbon, Porto, and other coastal areas from January 1, 2022, many people are looking into alternative ways to apply for Golden Visa, one of them is to invest in venture capital funds. Fund investment was included in the Golden Visa Regime in 2017. It is relatively new when compared to the property investment route, which was launched in 2012, being the main investment option taken by most Golden Visa applicants. However fund investment is gaining traction.

The minimum investment amount for venture capital funds is currently 350,000 euros, beginning from January 1, 2022, it will increased to 500,000 euros.

Here is some relevant information you should consider before taking your investment decision

Advantages of Fund Investments

Lower transactional cost - A purchase of real estate asset imply paying around 7% of the transaction amount on taxes.

Lower maintenance cost - No need to hire a property management company to manage your property for long or short term rental

Not subject to tax on dividend or capital gain income if you are non-resident tax payer

Diversification on investment - The fund will diversify their investments into different companies and/ or assets according to the fund policy and targeted risk/return

Higher potential earnings - Depending on the fund policy and targeted risk/return, capital gains yield can be significantly higher comparing to other investment options related to the Golden Visa program

Funds are highly regulated - Eligible funds for Golden Visa must be registered in Portugal, which means they are regulated and supervised by the Portuguese Securities Market Commission.

Expert management of your asset - Fund managers are experts and their full time job is to make sure the fund performs. Also, many funds have a performance fee which gives fund managers an extra motivation to achieve great results, meaning both investors and fund managers share the same objective.

There are also some drawbacks on fund investments, the most notable is the timing of the exit of the fund.

With a property investment, you have the autonomy of selling your asset and cash out at anytime.

With fund investment, it is a little different. The redemption of the fund and thus the liquidation and selling of fund assets is at the end of the fund schedule, and the ultimate object is to sell the portfolio as a profit. Though, this probably would not be in the exact timing of your 5 year Golden Visa period.

If you want to cash out at the end of your 5 year Golden Visa period, you can sell it in the secondary market, which can be quite illiquid. This doesn’t mean your investment would be at a loss, as it is anticipated that the investment has already generated income and appreciated in value.

What most fund investors do is to wait until the fund starts to dissolve. It may take time to seal a good deal and thus achieve a better return for the fund owners.

The reverse is also true. Unlike property where you can buy and hold as long as you want, buying into venture capital funds mean you won’t be able to hold it beyond liquidation.

For those who are interested in this route, it is important to note that the holding period is not certain and exact. This option isn’t advisable for investors who have a fixed timeline for the investment and need to cash out at a very specific moment.

As like all Investment, investors should invest based on their own objective, risk profile, total asset allocation, in order to find the most suitable asset to put their money in.

If you have any questions, please don’t hesitate to contact us.

Dear all,
Very helpful discussion on this topic. I am in advanced stages of making a decision on Fund vs Real Estate investment. I am generally risk averse and like the idea of having a professional manager running the fund, regulated by some regulator and preferably audited by a reputable firm. I came across Iberis Capital which seems to meet these requirements. Considering Portugal Yield Fund (PYF) from Iberis.

I have seen some of you investing in Greytech by the same fund manager but none (or hardly any1) considering PYF. So wanted to understand if I am missing any obvious risks or is it simply because their promised returns look low under the PFY. If any of you have invested in PYF could you please DM me to share your experience? I will try to DM investors in Greytech (not sure I will be able to as I have just joined this forum)

Other question was, if I start the process in March 2021, that is appointing a law firm to start the tax no application and bank account etc, can I complete my GV application before the new rules come into effect from 1 Jan 2020 (when investment via fund increases to EUR 500k)

Thanks

Hi Jeff,

Could you please advise when you started the process with Iberis? How long did it take to open the bank account and make an investment in the fund? Were they prompt to allot you your participation units and proof for GV application? Have you been able to complete your GV application/ biometric appointment?

Can you log on to Iberis site and monitor your investment, NAVs?

Thanks

I think many are passing on the Portugal Yield Fund because of the really high (7.5%) set up fee, compared to others which charge only 2-3%.

Thank you. Any recommendations for funds with similar profile - invested in operating real estate assets with no development risk and no near term leasing risk? I saw one other offering - think it was from Blue crow which invests in development agri projects and hospitality/ tourism sectors which appear highly risky in Covid era.

Some corrections to the information above. These have been discussed previously but to repeat:

  1. Portugal Yield Fund does have a high initial fee. However, that includes money towards services to get the visa. Many people pay for this separately. This fund wrapped it into their fund fee so you don’t have to pay extra. They are also open to paying it out if you choose to use another service.
  2. Blue Crow’s prospectus does mention leisure properties. However they currently own none and are holding out on purchasing any until they believe the market has bottomed out. Sounds smart to me.
    Take this info as you wish.
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Regarding BlueCrow, they are or are intending to invest in Industrial, Agricultural and Hospitality. Different from ‘development agri and hospitality/tourism’.

matt
I am in the process of narrowing down the list of funds and MedCapital . I was wondering if you had the details of the following
Setup fee (if any)
Term
Annual fee and Hurdle rate
Target return
Whether they will issue a PFIC annual statement
thanks

@Ravig80111

Setup fee (if any) 1%
Term 10 years, invested capital returned in 5-6
Annual fee and Hurdle rate 2% and 3%
Target return 20% IRR or 2.6x MOIC
Whether they will issue a PFIC annual statement Yes

Thanks Matt

Wanted to update the group on my GV application timeline, in case it helps others to plan:

  1. My initial application went to SEF in late December and was approved (with the fund split) this week. So, about 11 weeks total start to finish.
  2. Far up the message chain here, there was a discussion about whether you can invest in 2 (or more?) funds, so long as the total investment come to €350k. People seemed to get mixed messages about that from their legal reps. I invested in 2 funds and the application was indeed approved. So anecdotally, the splitting of funds seems to be ok with SEF.

Now I need to schedule biometrics in PT but the SEF offices are currently closed and not taking appointments so no idea how far out they will be scheduling once they reopen. Fingers crossed it is before 2022!

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Thank you so much for letting us know that you were successful in splitting funds and receiving pre-approval. Up until very recently, my impression from this forum was that it was not recommended. I recently reached out to every attorney, fund, and bank that I’d spoken to in the selection process and while most said that they don’t expect it to be an issue, only one attorney and fund confirmed that they have an investor that did so and has received pre-approval. You confirmation is very helpful and confidence inspiring as I am planning to do the same.