- Transparency is increasing
- Fees are decreasing
- Brokers are being phased out in favor of Registered Investment Advisors
- Assets are moving from expensive, actively managed mutual funds to low cost, passively managed exchange traded funds (ETFs)
ETFs growing like weeds, investors struggle to keep upIf ETFs have evolutionized (it's not really a revolution) our investment choices, information and commentary on how to use ETFs haven't quite kept pace. Investors struggle to understand exactly what an ETF's strategy is and how it's managed. Heck, professionals are drowning in trying to make sense of all the new ETF offerings. A new platform, called Motif Investing, may be changing all this...
Motif Investing: DIY ETF creationMotif Investing is a platform to invest in ideas. The site has more than 50 motifs: groups of stocks orbiting certain investable themes. We don't lack of investment ideas -- we struggle how to act upon those ideas. We struggle finding the right vehicle to use to play them out. Top motifs right now include Healthy and Tasty, a collection of stocks that riff on the healthy and tasty theme in grocery (Whole Foods) , restaurant (Chipotle Mexican Grill), and nutritional products (Herbalife). For less than $10, an investor can purchase an entire motif of approximately 30 stocks. In a way, Motif Investing allows you to learn, create, and share these portfolios in your social circles -- perhaps a better and more flexible model than investing via ETFs.
Here's how to get started investing on Motif1) Sign up: You'll have to sign up on Motif before you do anything else (though you can explore the Motifs without an account). You can start by going to Motif Investing and logging in via your Facebook account and then giving an email address and password.
6) Connect and network with other users: The platform is social so you can begin requesting connections (someone has to allow you to follow them -- privacy is respected) from other users. Once granted, you can follow your connections' activities, their ratings of different motifs, and other social activities.
This is Hardeep Walia's profile, founder and CEO of Motif Investing. You can see that you need to request friending and then in the center of the screen, you can see your followers' activity stream.
7) Drill down, customize interesting motifs: Once you identify a motif that tickles your fancy (maybe a friend liked it or you found it via a search/browsing), you can drill down into that portfolio to see its composition.
So, on this motif (Healthy and Tasty), the idea is to capture this counter-culture trend towards eating and living healthier. The portfolio is a collection of stocks that riff on the healthy and tasty theme in grocery (Whole Foods) , restaurant (Chipotle Mexican Grill), and nutritional products (Herbalife).
Motif users can see how others rank the individual motif (the spectrum between bull and bear). Perhaps, a user likes the theme but doesn't like the inclusion of a specific stock. You can click on the 'Customize Motif' button in the upper right of the screen to take it out, add additional stocks, or rejigger the allocations within the motif. You can even see how many users tweaked the motif or invested in it, as is.
Eventually, Motif will enable users to create their own Motifs but the customization feature is the closest one can come to that right now.
8 ) Buy the Motif: Once you've identified the Motif(s) you're interested in investing in, consulted your social network (if you like), and customized the portfolio, you're ready to invest. Click the 'Buy Motif' button and with one click and $9.95 in commissions, you've just purchased a themed portfolio of around 30 stocks.
9) Rinse and repeat: You can use the same process to invest in multiple Motifs. You can also periodically check in our your portfolios and ensure everything is going as planned. If there are any outlying performers, Motif does allow you to sell individual stocks out from your portfolio for tax loss selling, for instance.
More resourcesSign up at Motif Investing
Video interview with Valley Girl/Mashable