Immigrant Investor Visas and Diversification: An Application of Modern Portfolio Theory to EB-5 Regional Centers
By William Tolin Gay1
The EB-5 or immigrant investor visa process is a method of obtaining green cards for wealthy foreign immigrants who invest money in the United States. The basic requirement for the EB-5 visa is to invest a certain sum of money in a business enterprise that creates at least ten permanent jobs over a two-year period. For the past several years, most immigrant investors have elected to invest in "regional centers," rather than creating their own businesses.2 A broad range of investment options are available to foreign immigrants, with varying levels of risk and return. This paper assumes that the principal reason for investing in a regional center is obtaining permanent residence.
Modern portfolio theory ("MPT") is a financial analysis methodology that assumes an investor can reduce overall risk, without necessarily reducing expected return, by means of intelligent diversification over a carefully selected portfolio of investments. MPT is at the core of most modern investment models.