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Try-It-Out Tuesday: Investing in Ideas

Sometime in the beginning of 2010, Hardeep Walia and Tariq Hilaly were sitting in a coffee shop talking about trends that by now are old hat, but at the time were new and exciting: the rise of tablets, cloud computing and the mobile internet. Everyone was saying these ideas were going to be huge, but Walia and Hilaly — finance junkies with MBAs from The Wharton School and Harvard, respectively — realized that there was no way to invest in them. There were no cloud-computing mutual funds in which they could deposit money, no mobile-internet-focused ETF they could buy. Walia and Hilaly decided they wanted to change that.

“I think almost every start-up idea starts in a coffee shop,” Walia joked.

A little over two years after that coffee shop meeting, in June of 2012, Motif Investing was born. An investing platform that lets consumers invest in indexes (“motifs”) of 30 stocks centered around a similar theme — for instance, companies that produce technology that enables cloud computing — Motif’s mission is to make investing accessible and even a little fun.

“We’re an online broker, except we don’t want you to buy stocks,” Walia said. “We want you to buy the ideas behind the stocks.”

Screen shot 2013-07-23 at 8.43.56 AMInvestors can invest as little as $250 per motif, and will pay $9.95 to buy a motif of 30 stocks. Motif themes range from the lighthearted (there’s a “Pet Passion” motif containing 30 different pet supply or veterinarian care companies) to the technical (a “Buy the Dip” motif offers stocks in 30 companies that have recently taken a beating in the market). There are no management fees; Walia and his team make money on the $9.95 commissions.

“It’s 30 cents per stock. We’re making money selling you these 30 [stocks],” Walia said. He couldn’t get into the technology behind the platform because the patent is still pending, but on the subject of how he makes money, he could say this: “We have a set of trading algorithms. We’re able to bring down the cost of trading. We’re a high-margin business.”

All motifs are customizable, so if you don’t like a certain company or for employment purposes can’t hold specific stocks, Motif lets you sell that stock while still holding onto the overall motif. And when it comes time to rebalance your investments, some motifs come with the option to automatically rebalance annually, while others have the option to rebalance quarterly. But Motif won’t act on your behalf without your permission.

“You always have to click yes,” Walia said. “We want to empower the investor.”

If anecdotal evidence is any indication, the Motif investors like the empowerment — along with the freedom of investing in ideas they can relate to, rather than funds and stocks they need to closely research.

“I used to be real concerned with the details of investing — picking a company and pulling it apart and trying to figure out their earnings for the next quarter, said Don Haley, an air conditioning technician in American Fork, Utah. “With Motif, you focus more on trends and ideas and it takes away a lot of the burden of digging into each individual stock.”

Haley, who has invested just under $100,000 in Motif indexes, says that the process can be very fun — but he takes it very seriously. He focuses his attention on motifs dealing with alternative energy or natural gas, and estimates that in the past year of using the site, he’s earned a 32 percent return on his investments. (Returns vary depending upon the motif, so success like Haley’s is neither guaranteed nor standard across the site.)

“I don’t consider it play money at all,” he said. “It’s money I would have put into a brokerage account anyway, and instead of doing that I put it into a motif.”

Other investors like Motif because they find it more affordable than other investing options.

“It allows the little folks like me to play,” said Lois Mayerson, a 75-year-old Denver resident.

“For as little as $250, people can buy something they’re interested in. You can’t do that with the regular stock market,” Mayerson said. “It’s a wonderful advantage. And hopefully it will get more people interested in investing. Because nobody’s going to look after your money better than you do.”

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