October 28, 2013

Introduction to the business startup Motif Investing

Motif Investing was founded in 2010 by Hardeep Walia and Tariq Hilaly with vision is to reinvent the ETF industry. The basic idea is that you as an individual can create your own ETF called Motif. These Motifs are more flexible than the standard ETF, so they can include everything between heaven and earth, such as "Bailout-free banks," a collection of the companies with most likes on Facebook, or "Junk food." The only limit is 30 stocks per Motif and you can customize the weightings of each stock. 

In total, there are 15,000 Motifs to choose from. And more will be added as they are created by the users because each user will earn a sum through the creator royalty program if someone invests in an Motif the user created. If you want to invest in an Motif, you have to pay $9.95 and the minimum investment size is $250.  

Why Motif Investing is a good idea
  • The company has a clear revenue model
  • It would have been more expensive to buy the individual stocks in an Motif
  • You can make money if you are an expert in a certain area and create an Motif based on the expertise

Why Motif Investing is a bad idea
  • Since you can make money if someone invests in an Motif you created, the number of Motifs available will grow exponentially, so it will be difficult to find an interesting Motifs to invest in
  • You have to research each stock in an Motif you want to invest in since it's difficult to know if the user who created the Motif has the knowledge needed. If you invest in an ETF, you can be (almost) certain that he who created the ETF knows what he's doing since he/she represents the company