What’s a Motif Anyway?
Motif is a new investment option that aims to get you access to a particular type of stock that you want, in a single trade. In other words, once you enter a Motif trade, your broker will fill it with X number of shares of companies in the same industry. Further, you will get to choose the size of each investment, hence, having control over the average dollar amount you commit to the motif.
You also get to choose the number of stocks in each motif which means that you can build a sizeable portfolio in just a few minutes.
How Motifs Are Constructed
Motifs are stocks and/or ETFs that are linked together into a single investment in a portfolio called a motif. An investor pays an annual management fee to the fund manager for the work of creating and maintaining the motif. The fund manager typically charges an annual management fee of 0.75% of assets under management. The fee is charged on the total value of all of the stocks in the portfolio and is assessed whether or not the stocks actually perform. The management fee is taken off of the investment amount at the end of the year and invested into the motif.
The investment is a share of all the stocks and ETFs that are in the symbol, without the investor having to go through the hassle and time of investment diversification. Some institutional investors pay the management fees that the fund manager charges. The majority of investors pay for the management fees using free cash flow. It is in their best interest to minimize their management fees and the best way to do that is to diversify their portfolio as much as possible.
Since motifs are created using averages, the average weight of each stock in the portfolio is determined by first determining the weight of the it has. A and then multiplying that by the total number of stocks in the portfolio.
This way, each stock in the portfolio receives an equal weight that is a factor of its contribution to the overall portfolio.
Who Builds These Motifs?
Motif Investing is a team of investment professionals working together to make investing in stocks and exchange-traded funds (ETFs) easier. We’re led by James Harris, here to explain why finding the right investing motif is critically important in organizing your stock and ETF portfolio.
Motif Investing is not like investing in the public markets. With the public markets, your money is in the same pool as other investors. If they are buying, you are buying, and if they are selling, you are selling – they trade with you.
With Motif Investing, you trade with yourself. The funds you buy are always available to you, but they are never sold against you. You buy or sell on the same terms as any other Motif investor. We know that creating an ideal portfolio will require many trades, so Motif Investing is always there for you when you want to make a change.
How Much Does Motif Cost?
Let’s Talk Returns
When it comes to investing, most investors focus on delivering a positive return rather than worry about the various risks involved. On the other hand, some investors feel safer if they consider the risks as well, such as the risk of low returns and sometimes, a moderate probability of capital loss.
In reality, investors should also consider at the very least, the risk of capital loss, even if they are willing to take on the risk of low returns. However, when deciding whether to invest or not, how to invest, and how much to invest, the consideration of risks should be lower down on the list when compared to the assurance of a positive return.
It is ideal for investors to look for a positive risk-adjusted return that provides reasonable assurance.
Is Motif Investing Right for You?
First, it’s important to note that you will have to pay a monthly subscription fee because this is not a free service. However, you can contact them to ask for a trial period if you’re really interested in trying it out and find out what the monthly fee is before committing to it.
Motif Invest is different from other investing sites such as E-Trade, Schwab, or Fidelity where you can just log in and access your account. Instead, Motif Invest will need to provide you with expert guidance.
Apart from the analysis, Motif provides its users a set of investing goals to accomplish. Users are asked to tell Motif Invest their desired risk level, and how they plan to use the money in the future … just to name a few. This information is the backbone of every portfolio Motif Invest will build for you.
Motif Invest is a new site and seems to be trying to be as transparent as possible. After registering, users receive a welcome email from the CEO and Founder of Motif Invest. That’s pretty important to me. The point is to educate you on how their service works, so that you know what to expect and what changes are taking place. I know this because I’ve been in the same position as a customer.