Motif Investing is a new brokerage firm that is unique in that it lets you buy an entire basket of up to 30 stocks for only $9.95 per trade. I previously thought that this would be useful to creating your own “custom ETF” of whatever you want, for example dividend stocks.
This week, they rolled out a new set of “motif” baskets which are focused on passive, index fund strategies. I’m happy to see this, although in my opinion some are hits and others are misses. You can find them under the “Investing Classics” category:
- Permanent Portfolio. Based on the Harry Browne Permanent Portfolio of 25% stocks, 25% long-term bonds, 25% cash (short-term bonds), and 25% gold. Their implementation seems a bit needlessly complex, however, as they use over 15 ETFs to replicate international stocks when they could have just used something like Vanguard Total International ETF (VXUS). But again, you can edit and customize the motifs to simplify down to 4-6 ETFs. Still, buying 5 ETFs of your choice in one go for $9.95 isn’t bad, and they will even rebalance for you as well.*
- Target Date Motifs. Based on target-date retirement funds, you can choose for example “Retiring 2050″ or “Retiring 2030″. I’m not a big fan of this one, if you want to go this route I’d just stick with the Vanguard Target funds bought directly from Vanguard for no commission fees at all and the highest level of simplicity.
- Ivy League. Based on the Yale Endowment manager David Swensen portfolio. Nice and simple, just the 6 ETFs matching each of the asset classes as described in his book Unconventional Success. I’m biased of course, as my own portfolio is very similar to this.
- Index Fans. Supposedly based on the Boglehead philosophies of Jack Bogle, founder of Vanguard. I don’t know why they chose to use a combination of the Total World Stock ETF (VT) and Total US (VTI), when VT is already 50% US stocks and hold a lot less companies (and thus less diversification) as compared to holding US and non-US separately with VTI and VXUS. Or why they didn’t just use a single Total Bond ETF (BND) for bonds. I’m thinking they didn’t actually get official Bogle approval, nor did they read the Bogleheads book.
*Excerpted from a previous interview with Tariq Hilaly, Motif Investing’s Co-Founder & Chief Investment Officer:
MMB: Does the motif ever “rebalance” in the future back to the original weightings to prevent drift?
A: Yes, we rebalance most motifs on a quarterly basis. On rare occasions, with longer-term investing strategies that take longer to play out, we rebalance once a year.
$150 Sign-up Bonus.
Motif Investing is also offering a $150 cash bonus when you open a new brokerage account with $2,000+ and make 5 trades at $9.95 each. If you make 1 trade, you’ll get $50. 3 trades will get $75. The new funds must be posted to the account within 10 calendar days of account opening, and must remain in the account for 45 calendar days.