Portugal GV Fund Comparison?

I’m not sure I agree that’s how it is. There are several people AFAIK who chose Iberis, anecdotally - few tend to speak about what they actually bought. Fewer speak about PG, I can’t speak as to why, but I haven’t seen anything one way or the other, besides complaining about fees, but let’s face it, everyone complains about fees on all of them.

Jeff, thanks for your comments. You are spot on that these finally come down to personal preferences - unless, someone used data that is not already discussed widely in the forums :slight_smile: For example, the view that PG’s startups are likely to have better access to incubation services.

Rock Capital vs BC comes down to specific sectors of exposure and I know which direction I am likely to go .

You pro splitting between VC and “boring” funds, correct? What about IMGA/BPI?

Also seems that BPI is at all-time high, meaning the risks of a drawdown there might be higher compared to IMGA or other funds for the matter. Did anyone looked into other funds, such as:

Portugal Ações
Caixa Ações Portugal Espanha
Invest Ibéria
Futuro Acção

This particular thread has spent little to no time on the non-VC funds like IMGA/BPI and it is probably better to keep it focused there. There are other threads that go into more details on them, probably most notably

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Hi Jeff

Your thread that you are mentioning is for US only investors?

In my research, none of the Iberia or PT+ES funds qualify because they do not have 60% investment in PT. Since Spain is the larger country basically any fund that invests in both will be majority ES investments, not PT.

None of the threads are specificcally US only, though it’s certainly often part of the topic.

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Full disclosure to start, I am with Portugal Gateway Fund.

I think that some people have a mistaken impression of Portuguese Golden Visa investment opportunities. The Portuguese government created this in order to attract risk capital, and as a result all eligible investment opportunities, regardless of the asset class, are high risk. I think all credible advisors or investment managers acknowledge this and state it up front and none would mind my stating this in a public forum. As investment professionals we have a duty to be honest to our investors.

Venture Capital is clearly high risk/high return and I doubt I need to elaborate on this. And as far as I know almost all of the funds require lock ins of around 10 years, which impacts heavily on liquidity.

The Portuguese equity index has dropped around 3.5% per annum on average over the past 20 years and in the last 10 years has on four separate occasions dropped by more than 40% in a 12 month period. To confirm that you can download the PSI20 index which is publicly available. So open ended funds which invest in listed Portuguese equities have the advantage of liquidity. But given that the Golden Visa requires a lock in of at least 5 years and more realistically 7 years this liquidity is of limited value.

These open ended equity funds therefore have the advantage that risk of catastrophic loss (100% of your capital) is very low, but on the flip side they have the disadvantage that if you had invested 100€ in the index in 2014 that would only be worth 65€ now and there is no reason to expect that trend to change in the future. So you are protecting yourself against loss of all of your capital by paying away 35% of your capital over 7 years.

Property (whether directly or via a fund) is at least as risky an investment as VC for several reasons. Firstly, the Bank of Portugal, in a recent risk statement (Press release of the Banco de Portugal on the June 2021 issue of the Financial Stability Report | Banco de Portugal), placed the bursting of the property bubble as one of the most significant threats to the Portuguese economy. Secondly, these projects depend on leverage, which by its nature introduces risk. Thirdly, Portuguese property prices are historically very volatile – if you look at any of the publically available property indices and go back 20 years this is clear. And finally, no one knows what the long term impact of COVID will be on property markets.

So anyone looking for a low risk investment option is not going to find one I am afraid. The price of getting a Portuguese Golden Visa is to take risk on your capital and if your portfolio cannot support this risk then it may be appropriate to reconsider if this option is for you.

But this is not necessarily bad news. Some of these high risk options are also high return, and may have a place in your portfolio. And with all financial markets currently overheated the risk/return ratio in these investments may not differ that much from some more traditional investments.


Some fair points, but one quibble. If we’re comparing an index to a fund, it’s important to include the impact of dividends, since the return on investment will include both. Many open-ended funds such as BPI Portugal or IMGA will reinvest dividends they receive from underlying holdings, and the dividend yield on the PSI20 averages over 4%. Thus the total return on the index or a fund investment will be much higher than the index’s price return, particularly over a long period.

Here are some comparisons:

Since 1 Jan 1993 (PSI 20 launched):
PSI20 (price) +77%
PSI20 (total return) +305%

Since 2 Jan 1996 (BPI Portugal launched):
PSI20 (price) +36%
PSI20 (total return) +212%
BPI Portugal +272%

Since 3 Mar 2000 (peak level):
PSI20 (price) -64%
PSI20 (total return) -20%
BPI Portugal +6%

Last 20 years:
PSI20 (price) -22%
PSI20 (total return) +69%
BPI Portugal +108%

Since 1 Apr 2014 (more recent peak):
PSI20 (price) -31%
PSI20 (total return) -9%
BPI Portugal +2%

So while it’s true that (for example) the index has lost 31% since the mini-peak of 2014, it’s down a less alarming 9% with dividends reinvested in the same period. Broadly (with dividends) the PSI20 has been treading water over the last 15 years or so. One reason is that it’s largely missed out on the tech boom from around 2013: instead the index is biased towards electricity generation, food retail, paper, energy and banks.

Of course, you can absolutely lose a lot of money on a 7 year investment: for example, if you’d been unlucky enough to invest in December 2007 and redeemed 7 years later, you’d have lost 50%, even including dividends.


Clearly, you have not read enough of the marketing materials of a bunch of the funds. :slight_smile: :slight_smile: :slight_smile:

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Fair point yet that particular thread mostly caters to US investors rather than everyone.

As per catastrophic drop, currently we at S&P 500 highest, and hopefully the imga/bpi don’t have too much of exposure to that index stock inside, otherwise they well might repeat the December 2007 pattern.

I suppose it’s worth saying that the period 2007-2014 encompassed both the global financial crisis and the eurozone debt crisis (Portugal exited its bailout program in 2014). So it wasn’t perhaps the finest hour for peripheral European equities… :slight_smile:

A post was merged into an existing topic: Portugal Golden Visa Investment Options – Which One is Best for You

Totally correct on all points Chris, but one also needs to take tracking error into account when one looks at an index fund or manager performance when looking at an active manager.

Tracking error should be small (fees and expenses) on a large liquid market index, but on a small iliquid market index (like Portugal) can be very high, and always to the downside. I am open to correction but I think that all of the index trackers have total expenses of around 2.5% per year? This accounts for most of the dividend right there. Similarly, a manager can outperform, but it is not often a manager will beat the market over a lengthy period of time and the out performance can also be fairly high, especially as it seems their fees are also over 2% per year?

So all of these can balance all or part of the dividends.

Good data. You alluded to it, but I would just add that one thing that turned me off from the PSI-20 is that it is not really diversified. EDP (energy), Galp (energy), BCP (bank) and Jeronimo Martins (grocery) make up 59% of the index. Add in REN (more energy) and Sonae (another grocery) and you are ~69%. 20 stocks is kind of small for a index to begin with, but with the weighting it’s not really the “PSI-20” it’s more like the “PSI-4” or “PSI-6”.

See: PSI-20 - Wikipedia

Is there any official commitment by SEF or Portuguese government to sustain the program over the next 5-7 years? What are the chances that they or the next government will cave in to the EU pressure, and basically cancel the program for everyone are still holding these funds or a real estate?

Not AFAIK but I’m not super deep into it. I’d be a bit surprised if people were kicked mid process, seems more likely that they would just change the rules for new applicants to the visa, or worst case make it so to get citizenship you have to actually spend a lot of time in Portugal

It’s certainly a concentrated index, as you say. I think the weightings in the wiki are out of date: figures for 31st August are below (I’ve taken the data from CMVM, the Portuguese Securities Market Commission). 22% is in food retail, and 32% in various forms of electricity generation/distribution. It seems a pretty defensive portfolio, which may or may not be what people want.




Thanks for the data, considering that lots of traditional businesses have not recovered yet, it might be a good idea to enjoy the potential flight of capital from S&P tech into these sectors.

By the way, I noticed that both IMGA and BIP are having their additional holdings in some of the same PSI-20 companies.

I think the issue with that is that money from the S&P isn’t likely to go into these sectors in Portugal. Money tends to stay in the country where it it lives, it tends not to go offshore. When asset managers think “international” they tend to think “multinationals” esp if they’re multi-listed. So some shift from one sector to another is highly unlikely to even cause much of a ripple in the PSI20.

I wonder how many listed companies there are in Portugal at all.