Motif Investing was named #4 in the CNBC disruptors 50 in 2014 and #23 in 2015. In terms of innovation and empowering an investor the idea and execution is quite fascinating. This site seriously challenges the preset ways of online investing in stocks. They provide a low cost, transparent platform, which is flexible and allows individuals to invest in whichever themes that catch their fancy.
HOW DOES IT WORK
Motifs are like thematic funds or a basket of securities which an investor can invest in. Say you like the theme green energy, the platform may have a preset motif, which has a whole basket of stocks or ETF’s that belong to that industry. You can invest in the whole basket online at a click of a mouse. There are preset weights given to the stocks which can be changed by the investor. Typically the basket will not be higher than 30 stocks or ETF’s.
The site has some 150 preset motifs which are created by their in house basket of experts, some examples of which are:
1. Biotech breakthroughs
2. Rising Interest rates
3. On the Road
4. Junk food
5. Couch Commerce
6. Minimally invasive surgery
7. Digital commerce
8. Senior care
9. Healthy & tasty
10. Precious metals
The sheer variety of motifs is mesmerizing. Say you are an avid traveler and see good potential in the industry. You can pick a motif like “On the Road”, it will consist of travel stocks like airline industries, hotels, online portals, vacation rental services, car rental services. All of the stocks in the motifs are picked after it passes through filters and risk assessment matrices and optimized. Then weights are assigned to them and the investor can buy the whole basket at one stroke at a very low cost. If the investor so chooses they can change the weights or add or delete stocks to the basket he owns.
All the stocks can be bought at a fraction of cost which you would otherwise pay your equity broker.
“Couch commerce” will contain all the sites where you can shop sitting on your couch. “Rising interest rates” will consists of stocks which will benefit if interest rates rise.
Apart from the 150 preset professional motifs the communities of investors have created customized 180,000 motifs which can be invested into. If an investor has created a motif and kept it open for the public and if others invest in it, he gets a royalty. A social platform lets people comment on the motif which brings in the crowd intelligence on play. It’s a fun way to interact and draw on public knowledge.
Motifs need not be all aggressive, they can be debt based like municipal bonds, or dividend yield or defensive safe stocks.
Thematic investing is not for the faint hearted. It is for a bit experienced investors who have insights and want to actionate their ideas. A doctor may not understand markets but may have an insight on or belief in some pharma breakthroughs. He may wish to invest in all the pharma stocks that do not export to the USA and thus are not dependent on US FDA. These ideas are not easy to execute, Motifs make it easy.
In the Indian context, suppose you wish to invest in companies which are going to benefit from the Prime Ministers Modi’s “Make in India” theme, or the “Swacch Bharat” theme or in the “Skill India” theme. You would have to put in effort to research, pour into Annual reports of companies and to sift through and pick companies who will be beneficiaries of these themes or pay an equity research advisor and pay handsome brokerage to implement these ideas.
We also have so many different preferences like religion, a community of investor’s wishes to invest in non-leather, non-tobacco, non-alcohol based companies, and some communities avoids companies who receive or pay interest.
As an investor you may wish to invest in all of those in your portfolio. Tobacco, Alcohol, Gambling, as you may believe vices may be morally wrong but profitable.
All of this can be actionated easily via motif investing.
It is interesting to see the developments in the western world, admire the innovations which disrupt and create a financial revolution. It is an experience to navigate the sites of these award winning platforms. They are no less than a piece of art.
India has seen the advent of discount brokers and robo advisory platforms. They are making inroads into the traditional model of trading into stocks. As acceptance of online platforms increase and volumes increase and investors get more mature, opinionated on trends, sites like these should get launched here too.
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