At the risk of getting hit up by sales reps, I am going mention a company and ask some questions in hopes for some feedback. Thanks!
Has anyone here invested with them or considered it for GV?
I see a lot about Optimize here but still not sure if open ended is the best option? With the potential change in the laws, it’s enticing to go open ended because if it’s retroactive I may want out. 10 years versus 5 is a big deal to me.
For those that are in the process, did you pick more than one company/program to invest in?
For those that went the SDIRA route, did any of you have to use some non-IRA funds and if so did you separate it out with a different investment?
I went with Optimize because I did not want to lock my funds up in PE or a closed fund if something changed in Portugal or in my life. I used IRA funds so do not have the experience related to dealing with the tax implications of non-retirement funds.
My wife and I are GV investors. Before making our investment I did deep research into more than 30 funds, including 6 open-ended funds.
Something to know is that you are not really buying Portuguese stocks, you are buying units in a private equity fund. Most of these funds are ticking the regulatory box, which means they are investing 60% in Portugal and the balance elsewhere in order to diversify.
As the mode of entry is PE and not direct stock purchase, there is a lot of actual fine-print when it comes to exit.
I personally interviewed fund managers from 3 of these open ended funds, and all of them confirmed that liquidation will take between 1 to 6 months, and they will charge exit fees. Adding up all fees (management fee, exit fees etc) it just ate into whatever notional appreciation we expected. Combined with the fact that exit is not an instant process, this was a major deterrent to us.
In the end we finally invested in a corporate debt fund that guaranteed to pay us 8% per year (after all fees). This was a safer, guaranteed return option which made sense to us as the income is tax-free. I received the first 4% within 6 months as promised. This fund also gave us the option to exit at the end of year 3 and year 5, at our discretion. No hidden terms and conditions governing exit.
Our takeaway from all this was:
Open-ended funds are not really as open or flexible as they claim
They are frequently more expensive than traditional closed-funds
By nature, do not offer a fixed-income guarantee.
The returns on capital may not be as good as you expect (especially if you are used to traditional US equities and ETFs).
The stock market in Portugal just isn’t comparable.
Many of these open-ended funds are actually holding 40% in US equity positions. You will just end up duplicating your own existing portfolio positions at a much higher cost.
In summary, it is definitely worth exploring other types of funds.We found a few traditional closed-ended PE funds actually offered a higher upside, and after long months of searching and research, our efforts were finally rewarded. Wishing you good luck on your journey and hope you find what you’re looking for.
Sure I’ll be happy to, but the last time I shared some fund names, the admins blocked my account and they asked me not to share. I think they only allow funds that they have a commission / marketing agreement with them.
I’m surprised to hear that, as (for example) BPI Portugal is sometimes discussed on these forums, and I know they don’t pay commission to anyone. Do please have another go to share the name of your debt fund, and the three open-ended funds you interviewed - it would be helpful to all. I’m sure @tkrunning won’t mind.
Hi Ryan, that’s simply not true. Your account was temporarily restricted from posting for suspicion of offering commercial consultation services to other forum members.
We have never restricted anyone from mentioning whatever funds they want in the forum—except people that try to astroturf funds they are personally involved with.
Please go ahead and share any information you have gathered for these funds, I’m sure others would find it helpful!
Hi tkrunning, thank you for the clarification. As a new user/GV investor, I received a rather stern warning, and I never shared information publicly after that.
Now that you have clarified, I will be happy to share information. I too first came here looking for information from others who have been down the same route, and I received a lot of benefit from this forum.