The bottom line: Motif is a strong choice for socially conscious investors or investors interested in buying fractional shares. Motivated self-directed investors may also find that the community of motifs is an intriguing way to explore investing options.
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Pros & Cons
Portfolio trades of up to 30 stocks or ETFs.
Theme- and values-based guidance.
No dividend reinvestment.
Minimal trading tools.
Compare to Other Advisors
Editor's note: Motif Investing ended operations in April 2020 and is no longer accepting new accounts. Existing accounts will be transferred to Folio Investing.
Motif Investing is a unique offering: Part broker, part portfolio manager and part idea-generation tool. The company lets investors trade stocks and exchange-traded funds — including fractional shares — for $4.95 (or $0 for next-day trades). The brokerage takes its name from its unique platform that allow users to build and trade “motifs” — themed collections of up to 30 stocks or ETFs — for $9.95 at the next market open or $19.95 in real time. The brokerage's robo-advisor platform, Impact Portfolios, provides a choice for automated investing with a variety of socially responsible themes.
Motif Investing is best for:
Investors who want to buy fractional shares of stocks or ETFs.
Thematic or impact investors.
Those who want to invest in IPOs.
Investors who want direct indexing.
Motif Investing at a glance
Motif offers three main account choices: A direct trading account to trade stocks, ETFs and themed motifs created by professionals and the motif community; a robo-advisor platform, Impact Portfolios, which provides automated investing in socially or environmentally conscious companies or industries; and new in 2019, a direct index account that allows you to invest fee-free in the top 500 large-cap U.S. companies.
Below is our table breaking down Motif’s brokerage features; scroll down to see how the company's robo-advisor, Impact Portfolios, measures up.
Where Motif Investing shines
Motifs: These are the foundation of Motif Investing and the feature that really makes the company stand out. The motifs fall into two overarching categories: professional motifs and community motifs. The professional motifs are built by Motif Investing, and the community motifs are built by investors on the platform who choose to share their motifs.
There are more than 100 professional motifs that trade for $9.95 in real-time, or $0 if you're willing to wait until the next market open. Community motifs and motifs you build yourself trade for $19.95 in real-time or $9.95 at next market open. Professional motifs also charge an annual licensing fee of 0.25% to 0.50% that functions like an expense ratio.
The depth here is impressive: Those who want to purchase a pre-built model can use tools to explore the options, including filters that search by professional or community, by category — such as green investing, financial services, social causes, health care, energy and natural resources — and by custom search terms.
There are nearly 11,000 community-built motifs that can be sorted by factors like performance, most purchased and highest dividend yield, alongside a ranking of 30-day winners and 30-day losers.
And then there are the Horizon Model motifs, which function like target-date funds, investing with a specific date in mind and reducing risk as that date approaches. The professionally built Horizon Model motifs are free of licensing fees.
To build your own motif, search stocks and ETFs, add the ones you want and adjust their weighting by either customizing each selection or allocating weighting evenly or by market capitalization. The tool automatically shows how your motif would’ve performed over the last year, benchmarking against the S&P 500, and that performance measure adjusts as you add and remove investments or change the weighting.
For frequent traders, the brokerage offers Motif Blue, a monthly $19.95 subscription which allows account holders to buy into their chosen motifs at a set frequency — biweekly, monthly, quarterly or annually — with three commission-free real-time trades per month and real-time quotes.
Theme-based guidance: If you’re a mission-driven investor, meaning you want to know that your investments align with your values or support specific industries you believe in, Motif is an attractive choice. Motif Impact Portfolios allows users to choose investments by three investing themes: Sustainable Planet, a portfolio of companies with a small carbon footprint, as scored by third-party firm MSCI ESG Research; Fair Labor, which picks firms with strong labor management and supply chain standards; and Good Corporate Behavior, which chooses companies with strong business ethics and fraud protection.
Or you can build a theme of your own. As noted above, the company makes it easy to sort motifs by categories, and you can easily create a portfolio with stocks and ETFs that align with your values. In this way, the service is similar to Stash, which also helps investors identify ETFs that align with their values, but Motif offers a much wider selection at arguably lower costs than Stash, which has a subscription-fee model.
Fractional shares: Motif Investing was among the first brokers to allow investors to trade in fractional shares to purchase individual stocks or ETFs. Users trade stocks in dollar amounts — say, $100 of Apple — rather than by the share, which means even small-dollar investors can purchase big-dollar stocks and cost-effectively diversify their portfolio.
IPOs: Motif provides access to select initial public offerings with no trading commission or fee. Account holders can browse upcoming IPOs on the site and indicate their interest or sign up to be notified about upcoming IPOs via email. The company offers fractional shares, but investors must commit a minimum of $250 to participate in an IPO. Like stock orders, IPO orders are placed in dollar amounts rather than by share.
Direct index investing: New in 2019, Motif is offering a direct indexing account using the Motif 500 Index, which captures the performance of the top 500 largest market cap companies on U.S. exchanges. The fund charges no fees and has a $10,000 account minimum.
Where Motif Investing falls short
Trading costs: Trading stocks, ETFs and fractional shares on Motif costs $4.95 per trade — a once attractive price, but now behind the times as most major brokerages offer commission-free trades. Motif does, however, offer $0 next-day-market-open trades (the downside, of course, is the price can shift between making the order and when the order is placed the next day).
High fees: Motif Investing differentiates itself with all the qualities highlighted above: the ability to build or find a motif that aligns with a particular mission or value system, auto-rebalancing combined with the hands-on building of your own motifs, and the flexibility of fractional shares. Still, the licensing costs of between 0.25% to 0.50% for motifs, combined with trading costs, can add up. You could easily build a portfolio of commission-free ETFs or no-transaction-fee mutual funds at another broker and pay nothing for each subsequent contribution. As noted above, Motif offers free trades on single stocks and ETFs at next market open, but the market price could swing significantly in that time.
Minimal trading tools: Motif Investing seems in part to target active traders, but the service lacks some of the features these traders typically want, including diverse research, analysis tools and a variety of order options. For example, traders can use stop and stop-limit orders only on sell orders. (For more on what those terms mean, see our post on how to buy stocks.)
Is Motif Investing right for you?
There are plenty of investors who will love this kind of service: You can get your hands dirty and customize a portfolio at a low cost. The ability to trade up to 30 stocks or ETFs for one low commission is truly noteworthy, as is the support in finding investments that align with your values. Motif is also one of the best services for diversifying a small investment, either by investing in motifs or buying stocks and ETFs in fractional shares.
On the other hand, Motif might not be the right choice for investors who prefer a hands-off approach — a robo-advisor might make more sense in those cases. And someone who wants to build a portfolio of commission-free ETFs or no-transaction-fee mutual funds, or trade other strategies like options, might also prefer another brokerage.