What are the basic requirements for a Portugal Golden Visa fund?

A qualifying fund must invest at least 60% in Portuguese companies, have a minimum maturity of 5 years, and not invest in real estate.

Is there a government-approved list of Golden Visa funds?

No, the Portuguese government and CMVM do not publish an official list. Eligibility is based on the fund’s legal documentation.

What are the differences between mutual funds (UCITS) and Alternative Investment Funds (AIFs)?

UCITS or mutual funds are highly regulated, retail-friendly mutual funds, while AIFs allow more flexible strategies such as private equity and venture capital, and are common for Golden Visa investments.

Can Golden Visa investors choose open-ended funds?

Yes, some Golden Visa-eligible funds are structured as open-ended, offering ongoing subscriptions and redemptions. However, because investors must hold their investment for 5 years to maintain eligibility, the liquidity advantage of open-ended funds is not usable. Moreover, open-ended funds typically invest in liquid, public assets such as stocks or bonds, which limits their potential return and strategic flexibility compared to closed-ended private market funds.

Why are mutual funds uncommon in the Golden Visa context?

Mutual funds must comply with strict diversification and liquidity rules, such as the 5/10/40 rule. Portugal’s stock market is too small and concentrated to meet these requirements effectively, which is why most Golden Visa funds are structured as AIFs that offer more flexibility and are better suited to the private investment opportunities within the Portuguese economy.

Can Golden Visa funds invest in venture capital?

Yes, many Golden Visa-eligible funds pursue venture capital strategies, targeting early- or growth-stage Portuguese companies with high upside potential. These investments support innovation and job creation while offering investors the opportunity for significant returns—albeit with higher risk and longer time horizons.

Are distributions during the fund term allowed under the Golden Visa rules?

Yes. During the mandatory 5-year holding period, funds can distribute returns through dividends without affecting your Golden Visa eligibility. Capital reductions are generally avoided during the 5-year period to ensure your invested amount remains intact. After 5 years, distributions can happen either through dividends or capital reductions, as explained in the article. It is essential that the investor keeps the fund units active throughout the holding period.

Can Golden Visa funds invest in corporate bonds?

Yes. Golden Visa funds can invest in Portuguese corporate bonds, which are issued by both listed and unlisted companies. This makes the bond market broader than the stock market, where only around 15 companies are actively traded on the PSI index. In contrast, over 200 different bonds are listed on Euronext Lisbon. Funds can also invest in private credit, which involves direct loans to companies and avoids duration risk, because private loans are typically held to maturity without market volatility.

Can Golden Visa funds invest in government bonds?

Partially. To qualify for the Golden Visa, at least 60% of the fund’s assets must be invested in Portuguese companies. The remaining portion may be allocated to other assets, including government bonds. However, few funds heavily invest in government bonds because their yields are low and may not cover fund management fees. Funds generally prefer assets with higher return potential to maintain viability.

When can I divest or sell my Golden Visa fund investment?

You must maintain your qualifying investment for as long as your Portuguese residency card is active. If you intend to apply for citizenship, you must maintain the investment during the initial 5-year period starting from your Golden Visa application date. After you submit your citizenship application, the residency card and investment become optional and you may divest.

If I invest in an open-ended fund, can I switch to another fund during the 5-year period?

No. Golden Visa law requires that your qualifying investment be uninterrupted during the 5-year minimum period. Selling your units in an open-ended fund typically takes around 5 business days to settle, leaving you temporarily out of a qualifying investment, which would breach the Golden Visa rules. Thus, switching funds mid-period is not recommended.

If my participation value goes below the €500,000 threshold, do I need to top up?

No. The Golden Visa law only requires that your initial investment was at least €500,000. Market value fluctuations do not require additional top-ups. This is why funds generally prefer to distribute returns through dividends rather than capital reductions, to maintain the invested capital level during the 5 years.

Can I split my €500,000 investment across more than one fund?

Yes. You can divide your €500,000 investment among multiple qualifying funds. In fact, many investors diversify their investment across 2 to 3 funds to spread risk.

What is the 'capital stack' in company financing?

The capital stack refers to the different layers of financing a company uses, ranging from senior debt (lowest risk, first repayment priority) to equity (highest risk, last repayment priority). Each layer has distinct risk and return profiles.

What is 'dry powder' in closed-end funds and how does it affect Golden Visa investors?

'Dry powder' refers to committed capital in a closed-end fund that has not yet been invested. For Golden Visa investors, this means that even though the full €500,000 is deployed upfront, if the fund manager hasn't identified investments, this uninvested capital doesn't generate returns, potentially reducing the overall Internal Rate of Return (IRR).

Why is Portugal's public equity market generally not favored by Golden Visa funds?

Portugal's stock market (PSI index) is small and highly concentrated, with only about 15 companies listed on the main index and the top three accounting for nearly half its market value. This makes it challenging for funds, especially UCITS, to meet diversification rules, and it presents high sector concentration risk and historical underperformance compared to broader indices.

What is the typical return profile for corporate bond funds in Portugal for Golden Visa purposes?

Corporate bond funds investing in Portugal typically offer modest yields, around 2-5% per year. While they provide capital preservation and predictable income with lower volatility, these returns may barely outpace inflation and might not cover the real costs associated with the Golden Visa.

What is the main difference between Venture Capital and Private Equity in terms of company stage?

Venture Capital focuses on early-stage, high-growth companies (seed to Series B/later stage) with high upside potential but also high risk. Private Equity, including growth capital and buyouts, typically targets more mature, profitable companies, often with established cash flows, aiming for operational improvements and strategic transformation.

What is the 'power-law distribution' in Venture Capital returns?

The power-law distribution in Venture Capital indicates that a small percentage of successful investments account for the majority of a fund's total returns. Many investments may fail or yield minimal returns, making careful fund selection crucial for investors.

How does Private Debt (Private Credit) differ from public corporate bonds?

Private debt is not publicly traded, avoiding market volatility and duration risk as loans are held to maturity. Returns are contractual and cash flow-driven from interest payments, typically with shorter maturities for individual loans (2-3 years) compared to public bonds.

What are the different types of private credit (or debt) strategies available for Golden Visa funds?

Private credit strategies include Junior Debt (subordinated, higher yield), Mezzanine Debt (hybrid with equity-like upside), and Distressed Debt (investing in financially troubled companies for substantial upside through restructuring).

Why has private credit grown significantly since the 2008 financial crisis?

Private credit growth has been driven by institutional demand for predictable income and uncorrelated returns, along with stricter banking regulations (like Basel III) that have made it harder for traditional banks to lend to small and mid-sized companies, creating a gap filled by private credit funds.

What is the typical use of leverage in Portuguese private equity buyouts?

In Portugal, private equity buyouts typically use moderate leverage, with debt often representing less than 50% of the capital structure. This reflects a cautious approach driven by market dynamics and risk management, especially compared to historical leverage levels in other markets.

What are the main value creation levers in private equity buyouts?

The main value creation levers in private equity buyouts include deleveraging (repaying acquisition debt with company cash flows), EBITDA expansion (driving profitability through revenue growth or operational efficiency), and multiple expansion (enhancing valuation by improving strategic positioning or exiting in a favorable market).

How do turnaround strategies in private equity differ from distressed debt strategies?

Turnaround strategies involve acquiring equity stakes in financially or operationally distressed companies and playing an active operational role in their recovery. Distressed debt strategies, conversely, target undervalued debt securities of distressed companies, aiming to capitalize on their restructuring scenarios.

What role do private equity funds play in succession challenges for Portuguese businesses?

Many Portuguese businesses face succession challenges when founders near retirement without clear successors. Private equity funds step in as strategic partners, providing capital, professionalizing operations, and preparing these businesses for eventual sale or integration into larger entities.

What is the typical maturity of private credit funds for Golden Visa purposes?

Private credit funds are typically structured as closed-end vehicles with a 6-year maturity, making them well-suited to meet the Portugal Golden Visa's 5-year holding period requirements.

How does the '5/10/40 rule' affect UCITS funds in Portugal?

The 5/10/40 rule requires UCITS funds to diversify, generally limiting investments to no more than 10% in a single security and holdings over 5% to collectively not exceed 40% of the portfolio. Due to Portugal's small and concentrated stock market, it's challenging for UCITS funds focused solely on Portugal to meet these strict diversification requirements effectively.

What is a key benefit of AIFs over UCITS for Golden Visa investments?

AIFs offer much greater flexibility in investment strategy compared to UCITS. They are not bound by strict diversification rules like the 5/10/40 rule, allowing them to invest in private unlisted companies, take significant stakes, or focus on specific sectors, which is crucial given Portugal's market size.

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The Ultimate Guide to Portugal Golden Visa Funds

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Cristóvão Matos

Managing Director

Nomera Capital

Published: Mar 20, 2025Updated: May 23, 2025