Motif Investing is a way in which company offers their own alternative to packaged investment portfolios like mutual funds or exchange traded funds.Therefore Motif Investing is part investment product and service.
Motif simple means a decorative pattern or theme or design and Motif Investing means a way by which an investor can select theme-based investment portfolios that are designed around a specific investing theme or trend.
Motif Investing allows investors to select a particular motif, or theme-based portfolio, which typically includes about 20 to 30 stocks for a fee of $9.95 per trade. Investors can also customize their motif mix for an asset allocation.
Like every coin has two sides so does motif investing. There are several advantages and disadvantages to it that investor should know prior to investing. some advantages of Motif Investing are:
•Expenses: The ability to buy a portfolio of stocks or ETFs for less than $10 gives. There are no additional or hidden fees.
•Simplicity: there's no prior research or analysis required. Just buy a theme that fits your investment needs. Investors also save time by placing one simple trade for securities
•Rebalancing: it sells the shares of winners and buys shares of losers thereby potentially increase long-term returns while maintaining diversification.
These are the main disadvantages of Motif Investing:
•Performance Chasing: The motifs are more focused on theme than prudent diversification, which can lead investors to choose from a top-performing or the more popular ones.
•Dividends are not Reinvestment: Motifs don't allow for dividend reinvestment. So dividends go to cash until you buy again.
•No Limit or Stop-Loss Orders: there is no limit to market orders and no stop loss.
Thank youRegards
Author: Sakshi Lunia
Kautilya
IBS Mumbai
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