Welcome to our comprehensive guide on Golden Visa Funds in Portugal. As a trusted partner in facilitating Golden Visa applications, we at Pearls of Portugal aim to provide clear insights and answers to key questions for potential investors.
The intention of the Golden Visa funds is the capitalization, innovation, and development of Portugal and the investments are established under Portuguese law. Because of this, funds need to have a maturity at the time of investment of at least five years and at least 60% of the value of the investments has to be made in commercial companies headquartered in Portugal. The fund also cannot cover assets in the real estate market. The investment in Golden Visa funds is managed by so-called investment fund management companies and are regulated by the Portuguese Capital Markets Board – CMVM, plus audited, and valued by independent and licensed companies providing additional security and transparency to the investor.
In order to qualify for a temporary residence permit, the investor must perform and maintain an investment activity for a minimum period of 5 years. The investment activities that may entitle the investor to a temporary residence permit are foreseen in the relevant law. The investment activity may be performed directly by the applicant or through a single shareholder limited liability company incorporated in Portugal (or in another EU Member State, as long as it has a permanent establishment in Portugal).
All funds are regulated by the Portuguese authorities (CMVM, the Bank of Portugal, the external Fund Manager, and the Tax Authorities). Regulated funds must ensure transparency, risk mitigation, and control, as well as regularly fully audited accounts. Some funds are backed by the Portuguese government through subsidies or financed by the IFD (Instituição Financeira de Desenvolvimento).
After defining the investment objective, the individual risk preference, and the investment period, selecting a suitable investment product also requires the consideration of other important factors. For example, legal and tax law aspects must be observed in the case of funds with a foreign residence. It should also be clarified how high the costs of the assessment are.
Pearls of Portugal facilitates your investment in Portuguese Golden Visa funds, which grant you residency in the country and an EU passport, allowing you to travel freely across Europe. These are some of your current options for Golden Visa funds in Portugal:
| Fund | Fund Objective | Minimum Investment | Duration | Deadline | US citizens |
|---|---|---|---|---|---|
| Consolidar Fund | Help small and medium companies in Portugal, in various sectors including tourism and education | €100.000 | 8 years | 2025 | Yes |
| Lince Growth Fund | Investment in fast-growing Portuguese companies | €100.000 | 8 years | Oct 1, 2025 | Yes |
| Pela Terra II: Regenerate | Farm development | €250.000 | 8 years | November 1, 2025 | Yes |
| Solar Future Fund | Clean energy investment | €250.000 | 8 years | Jan 14, 2025 | Yes |
Investing in the Portuguese Golden Visa Fund offers several advantages, including income tax exemption for non-residents on fund dividends and capital gains. These funds are regulated by Portuguese authorities providing additional security and transparency to investors. By investing in Golden Visa Funds, you can benefit from:
A risk profile is vital for Golden Visa investors to align their appetite for risk with the corresponding risk profiles of each of the Golden Visa Funds. There is no legislation regarding the different investment risk profiles. However, the most common designations are:
The preferred sources of information depend on the information needs and interests of the investor, as well as the type and amount of the investment. For an actively managed fund portfolio with equity funds, there is certainly a greater need for information than for a long-term savings plan with bond golden visa funds. Here are the following sources of information:
These funds are exclusively designed for Golden Visa investors. They usually offer the option of having a matching length or option of earlier withdrawal and accept €500K investments. These golden visa funds are often focused on preserving the investors’ capital and paying some type of yearly dividend.
These funds are normally invested in early to mid-stage tech companies with forecasted global growth. Sometimes there are higher minimum investments than the €500K threshold, with a fixed fund length of 10+ years. There is a higher risk but also higher potential rewards. The goal is to maximize the capital gains at the exit, with no yearly dividend payments.
These funds are typically invested in more traditional markets or financial entities, sometimes with a focus on yearly dividends. There can be a higher minimum investment than the €500K threshold, with the fund length going up to 10+ years, with often a medium to high risk expecting rewards accordingly.
The traditional fee structure of funds is called “Two and Twenty” (2/20), which consists of a 2% management fee and a 20% performance fee.
The management fee is a fixed fee charged on the total assets under management (AUM) of the fund and is ostensibly leveraged to maintain the fund’s operating costs.
The performance fee, on the other hand, is charged on the profits made by the fund and is used to reward fund managers and dealers, with bonuses for outperforming the market.
A fixed management fee of 2% ensures that the fund can survive an economic downturn if the fund is negatively exposed to pro-cyclical assets, while the 20% performance rate ensures that the fund always has the incentive to deliver absolute returns and is not merely relative to the investment.
The commonly postulated justification for the Two and Twenty fee structure is that it strikes a delicate balance between safeguarding the financial sustainability of the fund management company and, at the same time, creating incentives for fund managers to provide solid absolute returns.
If fund managers are able to generate extraordinary profits as a result, then paying performance fees to investment managers can be a price worth paying.
While the rate cut makes traditional funds more attractive to investors, sophisticated fee structures that link compensation closer to performance, offer an alternative mechanism for improving investor terms.
For example, many funds employ a ‘high watermark’ to ensure that fund managers are not overpaid in performance fees as a result of depreciation followed by a compensatory appreciation in the net asset value (NAV) of the fund. Without a high watermark, fund managers would earn performance fees twice over the same general increase in asset value – what is known as “double-dipping” – which is considered by many investors to be an unfair situation.
This is usually combined with a complex accounting mechanism called ‘equalization’, which ensures that all investors maintain the same NAV per share. In other words, equalization relativizes the high watermark for each investor, preventing new investors from taking advantage of paying performance fees due to a high pre-investment watermark.
In addition, an increasing number of funds use obstacles to ensure that fund managers are not rewarded for performance that does not exceed what could have been achieved through a passive investment strategy. The obstacle can be charged at a fixed rate or linked to an appropriate market index and is used to discount the performance fee so that fund managers are rewarded only for superior market performance.
While for ‘soft obstacles’, performance fees are charged on the entire funds’ return (given the minimum fee is exceeded) for ‘difficult obstacles’, fund managers only earn fees on returns that exceed the reference rate.
Within the ever-evolving realm of investment, the significance of informed decision-making cannot be overstated. Investors should prioritize thoughtful deliberation when choosing an appropriate fund for their investment. It is crucial to meticulously examine legal documentation and evaluate the expertise of fund managers.
If you are thinking of investing in Golden Visa Funds in Portugal but are unsure where to begin, we highly recommend you select a partner who will navigate you through the complexities of Golden Visa Funds.
Offering expertise, transparency, and a personalized approach to meet individual investment goals, the Pearls of Portugal team’s commitment is to empower investors with comprehensive information for your Golden Visa journey. Feel free to contact us and start your Golden Visa application today!
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