Motif Closing: Alternatives to the Mini-Mutual Fund Robo-Advisor

Editor’s Note: As of April 2020, Motif is shutting down. Client accounts will be moving to Folio Investing, while Charles Schwaab is acquiring Motif’s technology and intellectual property. Please see below for alternatives to this unique robo-advisor.

Robo-advisors are a different kind of investment platform from what you typically find in the investment universe. But Motif was a different kind of robo-advisor. The online investment platform enabled you to invest in mini mutual funds that are based on specific themes.

These mini funds were called motifs, which is where the service got its name.

Alternatives to Motif

On April 18, 2020, Motif founder and CEO Hardeep Walla announced that the fintech firm is shutting down. Current accounts have been transferred to Folio Investing. But if you’re looking for a robo-advisor, there are plenty of other great options.

For example, beginning investors who want to learn how to build their own portfolios might find a good alternative in M1 Finance. This robo-advisor will recommend a pre-made portfolio for your specific needs, or you can choose your own mix of stocks and ETFs. Either way, M1 Finance automatically rebalances your portfolio, maintaining an optimal asset allocation.

If you’d rather “set it and forget it,” Betterment is hard to beat. For a low fee, the robo-advisor will take care of building and maintaining an investment portfolio tailored to your specific needs. In addition, Betterment provides users with plenty of tools and features that can make setting goals and managing your finances easy.

What Makes Motif Different From Other Robo Advisors

Motif just might be revolutionizing the investment world by enabling investors to literally create their own investment themes.

Those themes include such offbeat investment categories as Chinese Solar, Shale Oil, Social Networking, Renter Nation, Online Video, Natural Gas Glut, Smart Grid, and Deflation.

If these don’t sound like garden-variety mutual funds or ETF’s, it’s because they’re not. They’re the kind of investment funds that only exist through Motif.

The reason these investment themes are so unusual is that they are created by individual investors who invest through the platform. Investors can also confer with other investors on the platform, and cooperate to create still more investment themes, or motifs.

So what specifically is a motif?

A motif is an investment that includes up to 30 stocks and/or exchange traded funds (ETFs). Each motif is comprised of investments that meet the chosen theme. They can be customized in any direction that you want. You need a minimum investment of $250 to create a motif, and you can include any investments you like, including fractional shares.

The platform itself provides dozens of existing motifs that were created by Motif. But in addition, there are thousands more that were created by the investors on the platform. You can participate in any of those motifs that you want, or even create your own.

This represents a real opportunity to invest your money in very specific motifs, based on your expectations that stocks in that narrow category are likely to perform well in the coming years.

Why not just invest your money in mutual funds or ETF’s?

1. The specific investment category that you are interested in may not be available through mutual funds or ETF’s
2. You may have an idea for an investment theme that is based around a very small number of companies
3. You may prefer to create your own portfolio around that particular theme

This is a radical departure from typical robo advisors. Most robo advisors, such as Betterment, Wealthfront, and M1Finance, automatically buy and sell funds based on your specific risk profile. These types of robo advisors are truly hands-off, allowing investors to focus on other things. In fact, with most robo advisors, you will have no say in how or what the platform invests in since it’s designed to be a hands-off affair.

Motif, on the other hand, allows you to create and manage your own investments.

Other Ways to Invest at Motif – Cryptocurrencies & IPOs

Motif also allows investors to purchase individual stocks, cryptocurrencies, and invest in Initial Public Offerings, or IPOs. These different types of investments can be an easier way for new investors to try their hand at different types of investing through a trusted platform.

Motif offers the ability to purchase partial shares, which makes it easy for you to limit your exposure to any specific equity or investment.

Motif Features and Benefits

Motif has a number of features and benefits, some of them found nowhere else:

Low minimum initial investment. You need a minimum of $250 to open an account, which is also the minimum amount to invest in any one motif.

Mobile app. Using your Android, iPhone, iPad or Apple Watch you can monitor and trade your Motif account remotely.

Complete investment freedom. As discussed above, you are free to invest in any one of the many thousands of theme based motifs that are available on the platform. Or you can create your own motifs, based on your own investment philosophy and strategies.

Low fees. Motif allows you to make an investment in up to 30 stocks or Exchange Traded Funds, all for one low price. We’ll cover this in some detail below.

Opportunity to work with other investors. Motif is one part investment platform, and one part social media outlet. You can take advantage of this social aspect to work with other investors in coming up with investment ideas, as well as to find others who might invest in any motifs that you create yourself.

Motif Fees

You can buy into any motif that you like for a single flat fee of $9.95. It doesn’t matter if your investment is $250 or $250,000 – the fee is the same. This is obviously a huge advantage when you’re investing with larger amounts of money. The fee will be so low that it will have virtually no impact on your investment performance.

It’s even better if you want to create your own motif. You can purchase and include up to 30 ETF’s and individual stocks in any motif that you create. The fee will be the same, $9.95. That’s a ridiculously low fee to pay to purchase a basket of individual securities, particularly if any of them are fractional shares.

And when the time comes that you need to rebalance your own motifs, you can do so for a single flat fee of $4.95. Again, for larger motifs, this is a serious bargain.

You also have the option to hold either individual stocks or ETF’s that are not part of any motifs that you own. The fee for any of these purchases (or sales) will be just $4.95 per security. That’s discount broker territory!

Building Your Own Motifs

Motif provides an opportunity for you to get creative with your investments. That’s because you are free to create your own motifs based on whatever theme you choose, and comprised of any investments that you consider necessary.

Your motif can include up to 30 stocks and ETF’s, and as discussed above, you can purchase them all for a single flat rate fee of $9.95 for the entire motif, regardless of the size of the investment that you are making.

The limit of 30 securities could be beneficial as well. Many mutual funds invest in dozens of different securities (hundreds if they’re index based), which can reduce investment performance. But what if you only wanted to invest in the top 10 or 15 companies in a given sector? By choosing the top performers, your investment return will likely be much better than any index-based ETFs.

Even if it is not something that you want to do, it’s an excellent option to have nonetheless.

Once you create a motif, it will be available on the platform for anyone else who wants to invest in it. And if you have been socializing with other investors on the Motif platform, you may already have a pool of willing investors to join in.

The specifics of creating a new motif are simple:

• Choose a name for your motif
• Add up to 30 stocks and ETFs of your choice to the motif
• Create the motif (done entirely on the Motif platform)
• Market the motif and invite other investors to participate

Through Motif’s Creator Royalty Program you can even earn royalties as a result of other investors either buying into your motif, or later rebalancing it.

Will Motif work for You?

Motif gives you all of the benefits of investing online, including all of the tools that you need to create your own motifs. They offer low fees and complete flexibility in a combination that exists nowhere else.

If you think that you have a creative flair investing – or would like just like to test some theories – itis well worth consideration. But even if you prefer passive investing, but you like your investments with a bit of a twist, you can simply invest in motifs that have been created by other investors.

If you are interested in this concept, check out the Motif website to get more information.