Over 30 years, the Portuguese investment fund industry has demonstrated vitality and dynamism to earn the trust of investors. Portugal’s asset management industry experienced turbulence after 2007 because of the international and the national economic/financial crisis, yet the sector has readapted itself gradually and with great conviction, managing to successfully surpass the new and demanding challenges that everybody is facing.
We do believe that times of crisis are also times of opportunities. After struggling, for some years, with constraints stemming from a clearly unfavourable tax regime (based on a taxation carried out in the sphere of the fund) that hindered Portuguese investment funds and prevented them from competing on equal terms with other products, APFIPP praised the entry into force in July 2016 of a new tax regime for the investment funds domiciled in Portugal (where taxation occurs in the sphere of the unit-holders), which we believe represents an important and decisive step to align the national framework with the best European and international practices.
APFIPP played an active role in defining this new regime, which fosters the comparison between Portuguese funds and funds from other countries and, therefore, opens new horizons for foreign investment in Portugal. In the specific case of real estate investment funds, non-residents are now subject to a reduced withholding tax of only 10%.
BATTLE FOR PROGRESS
But the battle for progress, for competitiveness and innovation is far from over. In a globalised and constantly changing world, investors are searching for innovative products that are transparent, cost-effective, reliable and safe. A co-existing trend is a need to improve the financial education of the general population, as shown by recent results from a OECD survey.
Although the Portuguese population is more aware of these issues, a lack of savings and a poor set of long-term financial goals are still very common. With this in mind, APFIPP is committed to enhancing financial literacy, drawing particular attention to the importance of saving (especially for retirement) and informing people about the characteristics of investment funds and pension funds as saving instruments. With this purpose, APFIPP has been supporting the work of the supervisory authorities in this field, namely in the development of educational and didactic initiatives among the younger generations, as today’s children will be tomorrow’s investors.
Also as part of its mission, APFIPP has been striving, with other stakeholders and government, to create products and solutions that best meet the needs and expectations of the market. In this sense, APFIPP is strongly engaged in the implementation of real estate investment trusts (Reits) in Portugal. This desire is transverse to the real estate sector, which sees this vehicle as able to attract international investment. Portuguese legislation already allows the creation of this kind of product, but it is considered necessary to establish a brand that immediately identifies the product when national operators distribute it to investors, especially to non-residents who are familiar with the concept of Reits.
In the field of innovation, APFIPP aims to provide the industry with a new marketing platform for funds based on blockchain. This will give access to all funds from participating management companies on executional and cost conditions we only can dream of. APFIPP closely follows technology developments and works to promote and modernise Portuguese asset management.
José Veiga Sarmento is president of APFIPP, the Portuguese Association of Investment Funds
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