According to Mr. ‘Walia'; The Goal of Motif Investing is nothing short of changing the world. We intend to disrupt the current investing landscape by empowering people to invest in the ideas they get from everyday life.
We’re not here to tell you what to buy or what to sell — we want to facilitate a simple and intuitive way to help be better – and more successful – investors. And we intend to do all of that at a low cost for our customers.
Motif Investing empowers individuals to invest in specific themes, or motifs as we call them. These are carefully researched and weighted collections of up to 30 stocks that reflect real-world trends and investment ideas. These motifs range from topics like Technology to Healthcare.
What makes Motif Investing different is that we don’t think anyone else out there has the same approach that we do around investing in ideas, and continue to approach the market in a conventional manner.
We are innovating around how you come up with investing ideas, how you share with your investing ideas with friends, and how investing can be more accessible to everyone.
Motifs are often compared to ETF’s but there are some differences.
An ETF offers the same diversification idea, but the more popular ETFs generally follow traditional investing approaches. Instead of a straightforward “senior care” or “caffeine fix” motif, you might get “mid-cap healthcare services” or “large-cap beverage company” ETFs.
ETFs don’t necessarily correspond with those great investing ideas, like a looming world water shortage, or an upcoming election. That’s because ETFs were often built around the asset-allocation model, and were created primarily for institutional investors.
Individual investors have little choice but to accept what the index or manager has to offer.
There are thematic ETFs out there, but I find that by the time they’re available – up to 18 months later — the unique idea is already mainstream.
ETFs also aren’t customizable — you’re locked to the securities the fund manager has chosen for you.
Finally, with a motif, you actually own shares, or fractional shares, of the stocks in the motif. When you buy an ETF, you own a share of the pooled ETF, just like you own shares of a mutual fund and not the actual stocks held in the fund.
A lot of people ask how our motifs are created. We have a very rigorous process:
First, our investment team searches for ideas, trends or world events that can be turned into investment opportunities. Many of the ideas come directly from our customers.
Next, we identify companies that will play a part in the investment idea. Most people would expect that Apple would be in there, because it makes the iPhone.
But they might not recognize all the other companies that are part of this sector too, like cell-tower manufacturers or semiconductor makers. Ultimately, we compile a list of up to 100 relevant stocks — something we call the Idea Index.
The stocks in the Idea Index are then weighted to reflect how much revenue they get from the “big idea” – and whether that’s a large or small part of their business.
For example, Apple generates a ton of revenue from the iPhone, but that total is still just above half the company’s overall revenue. Qualcomm, on the other hand, has nowhere near the revenue of Apple, but more of it is related to cell phones, so its weighting in the motif is virtually identical.
Finally, we build a motif from a subset of up to 30 stocks that we believe will best track the Idea Index.