Hardeep Walia, former GM of enterprise services at Microsoft was sitting around a few years ago with his friend Tariq Hilaly, a hedge fund analyst, batting around interesting investment ideas. But Walia realized that while he had a lot of thoughts about interesting trends such as cloud computing and tablets, he didn’t know how to put that knowledge to work easily in the stock market. He could spend a lot of time buying a bunch of stocks individually or he could pay fees and hand over control to a fund manager, without being sure he was really getting at the investment thesis he had.
So he and Hilaly founded Motif in 2010 with the goal of helping people turn ideas into investments and making the whole service social. The service, which has been in private beta, is now finally launching formally today and it’s got some big financial names helping it get off the ground. Former Securities and Exchange Commission Chairman Arthur Levitt is joining as a board advisor while the former president of Bank of America’s wealth-management division Sallie Krawcheck, who was also CEO of Citigroup’s global wealth-management unit, is joining as board member.
This is how Motif works:
- For now people buy into more than 50 Motifs, which are basically thematic indexes that include up to 30 stocks that are researched and weighted on how much revenue they get from a central idea. The Motifs capture some of the biggest current trends — things like Mobile Internet Tsunami and Tablet Takeover — to more political and news driven themes like Repeal Obamacare and Housing Recovery. There are also a few new Motifs for today’s launch including “Lots of Likes,” which covers some of the most-liked companies on Facebook and Income Inequality, that looks at retailers on the high and low end.
- When users select a motif, they can put in as little as $250 or up to $100,000. Each motif can be bought for $9.95 though commissions are waived through the month of June. Users can see how a motif has done historically against the S&P and see how Motif has weighted each of the stocks, how they’re organized into different investment theme categories and how each stock is doing. If they’re not happy with the motif, users can customize it by dropping certain stocks, adding back others from an index of 100 or so or reweighting how much each stock or category gets. At any time, a user can choose to sell a stock for a one-time fee of $4.95. On a quarterly basis, Motif will offer to rebalance the portfolio for a small fee.
- The service is also designed to be social so users can share what motifs they’re looking at or investing in with Facebook friends or a certain investment circle. They can choose to make their actions as private or as public as they want.
In the future, Walia said, users will be able to create their own motifs. And over time, they’ll also be able to rebalance whenever they like. But the idea is to help people turn their expertise, interest or knowledge about certain topics into an actual investment that is diversified across themes they understand.
“People have ideas and they want to put it them to work. We make that easier to do. You can get exposure to an idea not just to an individual stock,” Walia said.
Motif is part of a new class of online financial services that are making investing and portfolio tracking much easier. Services like SigFig and Personal Capital are bringing a lot of new technology tools to finance, helping users get a lot more intelligent about how they invest. Finance is one of those areas that can be transformed by online tools, but to date, it hasn’t really undergone much evolution beyond the emergence of online brokerages. That’s changing now. Motif has raised $26 million to date from Foundation Capital, Ignition Partners and Norwest VenturePartners.