Motif Investing Review :Is it worth the Hype?
In 2010 Hardeep Walia raised $26M off twenty pages of powerpoint. Only in silicon valley, you can do that Hardeep said in a Reddit AMA. Honestly, not many business plans raise $20 dollars with just a powerpoint presentation let alone $26M . In 2010 Hardeep Walia set out to disrupt the investment world with his crazy idea of selecting stocks based on themes. Wait ,Themes based stock selections , doesn’t every bank produce Thematic research pieces and portfolios what’s so different with Motif Investing ?Is it any good?We try to answer these questions in our Motif Investing Review.
What does Motif Investing do?
Starting with the basics, Motif Investing acts as a platform similar to any other brokerage platform which helps you invest in equities but it comes with a twist instead of direct equities you invest in diversified themes . So essentially users log into their page and can see a series of Motifs (theme based portfolios). Like in the Image below .
Motifs are essentially portfolios created by Community members and experts that you can look at and invest in .You can search for motifs using different filters, such as exploring by industry or looking for themes based on major macroeconomic catalysts . Like for Instance if you were smarter than George Soros and knew Britain would exit the EU , but you didn’t know which stocks ,asset classes or ETFs to invest in . Motif investing could have totally helped you .for instance one community user has created a portfolio that focuses on assets that would appreciate if Britain were to exit the EU.Needless to say, the Motif outperformed the major benchmark indices in the past couple of weeks .
Furthermore, It’s also possible to screen motifs by using different filters similar to stock screens such as popularity, returns and even thematic ideas like Water Management, Solar Energy etc .
There are two types of Motifs , Professional and Community made. The professional ones are done by research experts and Wealth managers while the community ones are created by users who wanted to create their own ETFs and share it. The best part about this service is its cost which is fixed at $9.95 for picking and making changes to any Motif. This is significantly less when you compare it to minimum stock brokerages which could run up to $4.95 for every stock .Instead, you just pay $9.95 for the entire universe of investable assets in a Motif.
Motif Investing also offers a ton of customization options , for instance, if you pick the Motif “Invest In Marijuana” which has given an annual return of about 31% and believe you can add some actual marijuana stocks from the Motif “Legal Marijuana” you can totally do so .You can assign different weights to asset classes,delete stocks from existing motifs add new ones . It’s all covered in the $9.95 you pay for the Motif.
Motif Investing Review : The Negatives
The idea of crowdsourcing Investment themes helps in the sheer number of choices available to users.But this could also act as a pitfall as times as the Names of Motifs doesn’t essentially mean the underlying stocks in the portfolio would be related to the theme. In our search, we found a lot of Community Motifs that have random stock selections. Hence it is very much possible that could get exposure to junk stocks , but you can of course certainly modify the weight or delete the stock if you wish.In our view, it still remains a risk for newcomers in the investment space. Furthermore, a lot of users have also mentioned the platforms inability to reinvest dividends as a big hindrance .
Overall ,Motif Investing has gained a foothold in the investment management market with its unique features and Customization options , In times of Robo Advisory boom , increasing digitization and dependence on automated investments this could stand out. Not because its interface is easy to use or the cost is cheaper , but primarily because of the sheer array of themes its got to offer.
Motif Investing Review : Looking to the future
If you are a frequent trader then Motif has got you covered, The Premium subscription service is currently in Beta phase. Motif investing is offering the services at $9.95 for rebalancing service , At $9.95 you also get access to webinars and VIP customer service.If you pay $19.95 for the Auto invest service you get access to a real time feed apart from all the goodies of the rebalancing service. If you trade frequently these services can help save costs significantly.
Although we will wait for the full roll-out before we do a full Motif Investing review for the premium service.
Recently, Goldman Sachs and Motif Capital, the investment advisor subsidiary of Motif Investing penned an agreement to license and deploy Motif Capital’s thematic indices through structured investments issued by Goldman Sachs. This will help Motif Investing gain traction in the institutional market.