How safe are the Bulgarian ETF UCIT?
Last Updated on September 24, 2023 by Bulgarian Citizenship Team
The amended Bulgarian Citizenship Act cancelled the bond investment option and introduced the ETFs and AIFs. Logically, the government was left with no choice but to put an end to the affordable bond financing options, which brought no value to the country, and introduce more sensible investment options.
The latest Bulgarian Citizenship Act offers investors Bulgarian citizenship by investment if they invest in Bulgarian ETF or AIF the amount of 512,000 EUR and maintain the investment for 5 years. The Act implies that the ETF should be licensed in Bulgaria, and its investment strategy is focused on trading shares of Bulgarian companies listed on the Bulgarian Stock Exchange. The ETF, similar to bonds, can be purchased remotely through a Bulgarian broker.
As a financial instrument, the ETF is considered riskier compared to bonds. Being riskier does not make the ETF necessarily more profitable. One of the ETF UCITs to satisfy the requirements of the Citizenship Act has been rather erratic over the last couple of years.
The ETF above was launched at 1.0342 per share on 03.10.2016. It then increased to 1.3207 on 11.08.2017 before its substantial depreciation to 0.6966 on 23.03.2020.
As of 18.06.2021, the price per share was 0.9121. In other words, if you started the citizenship by investment program in 2016 and sold the ETF in 2021, you would have lost around 100,000 EUR if fast-track.
The Bulgarian ETFs are expected to appreciate in value as they seem to be a good alternative to Bulgarian government bonds. It might be wise to invest in ETF before Bulgaria joins the Schengen zone when appreciated is forecasted.
You may read more about how to buy Bulgarian ETF remotely.
FAQs:
Can the ETF depreciate in value?
Like any financial instrument, the ETF value can appreciate or depreciate over time.
Can I buy the ETF through my home country brokerage firm?
The ETF can be purchased globally, and there are no requirements to buy through a Bulgarian based brokerage or wealth management firm.
How much should I invest in Bulgarian ETF to get Bulgarian citizenship?
You have to invest 512,000 EUR.
For how long should ETF investment be maintained?
The ETF investment has to be maintained for at least 5 years from the time the permanent residency was granted.
