It’s official – Charles Schwab has acquired Motif Investing, an online broker that enables users to invest in stocks and exchange-traded funds (ETFs) through themes like technology, sustainable investing, and more. As a fan of both companies, I’m excited about what this acquisition could mean for the future of investing.
Motif Investing, which was founded in 2012, has always aimed to make investing more accessible to people with different interests and values with its theme-based portfolios. Meanwhile, Charles Schwab has been a leader in the brokerage industry for over four decades, known for its low fees and strong customer service. It will be interesting to see how these two companies will blend their respective strengths to innovate in the investing space.
The acquisition of Motif Investing is not the only move that Charles Schwab has made recently. It also announced that it would be eliminating commissions on U.S. stock, ETF, and options trades, effective immediately. This bold move could disrupt the industry and force other brokerages to re-evaluate their commission pricing. As a consumer, I’m excited to see how this shake-up will affect my own investing experience and expenses.
Motif Investing Overview
Motif Investing is a unique online brokerage platform that allows investors to buy and sell baskets of stocks and ETFs (exchange-traded funds) known as motifs. Each motif contains up to 30 stocks or ETFs that are grouped together based on a specific theme or investment objectives. With Motif Investing, investors get an opportunity to diversify their portfolios by investing in a wide range of asset classes, industries, and sectors, all while keeping their investments aligned with their personal values and interests.
- Motifs: As mentioned earlier, motifs are baskets of up to 30 stocks or ETFs that investors can buy or sell on the Motif Investing platform. Motifs make it easy to focus on specific investment themes or ideas, and investors can choose from a variety of pre-built motifs or build their own customized motifs. Pre-built motifs include themes like biotech, solar energy, robotics, and many more.
- Low-Cost Trading: Motif Investing offers low-cost trading with a flat fee of $4.95 per trade, irrespective of the number of stocks or ETFs in the motif. This means that investors can invest in up to 30 stocks or ETFs in a single motif for the same cost as a single stock trade on other brokerage platforms.
- Socially Responsible Investing: Motif Investing offers a range of socially responsible motifs that align with various values and causes. For example, investors can choose from motifs that focus on environmental sustainability, gender diversity, and fair labor practices. This allows investors to build portfolios that reflect their personal values while still earning competitive returns.
Overall, Motif Investing is an innovative and affordable investment platform that offers investors a unique opportunity to diversify their portfolios while still staying aligned with their values and interests. With low-cost trading and a broad range of pre-built and customizable motifs, Motif Investing is an excellent option for investors looking to explore new investment themes and ideas.
What is Electronic Traded Fund (ETF)?
Exchange-traded funds, or ETFs, are among the fastest-growing investment vehicles in the world, with trillions of dollars in assets under management. ETFs are listed on stock exchanges and trade like regular stocks, with intraday pricing and liquidity. They are designed to track the performance of various markets, sectors, and indices, providing investors with an easy way to diversify their portfolios and gain exposure to a wide range of asset classes.
- ETFs are typically composed of a basket of underlying assets, such as stocks, bonds, or commodities.
- ETFs provide investors with a cost-efficient and flexible way to invest in a wide range of markets and asset classes.
- ETFs are traded on stock exchanges like a stock, which gives investors the flexibility to buy and sell them during market hours.
ETFs have become increasingly popular among investors due to their low fees and tax efficiency. In addition, they can be bought and sold like individual stocks, which makes them a convenient and flexible choice for investors who want instant diversification and exposure to a broad range of asset classes. As the popularity of ETFs continues to grow, they are likely to become an even more important part of the investment landscape.
With the rise of robo-advisors and online investment platforms, it’s easier than ever to invest in ETFs. Many of these services offer low-cost ETF portfolios that allow investors to build diversified portfolios with minimal effort.
| Advantages of ETFs | Disadvantages of ETFs |
|---|---|
| Low fees | Commission costs |
| Diversification | Tracking error |
| Liquidity | Some ETFs trade with low volume |
| Tax-efficient | May be impacted by market volatility |
Overall, ETFs offer investors a cost-efficient and flexible way to invest in a wide range of markets and asset classes. As more and more investors discover the advantages of ETFs, it’s likely that their popularity will continue to grow in the years to come.
Advantages of Investing in ETFs
Investing in exchange-traded funds (ETFs) has become increasingly popular in recent years due to the ease of access, low fees and diversified exposure to various asset classes. Here are some of the advantages of investing in ETFs:
- Diversification: ETFs offer exposure to various asset classes, sectors, and regions, allowing investors to diversify their portfolio. Instead of investing in individual stocks or bonds, ETFs provide access to a basket of securities, reducing the risk of single-security-specific risks.
- Low cost: ETFs are known for their low fees compared to mutual funds. Since ETFs trade like stocks, they have lower operating costs, and no loads or redemption fees. The low expense ratios of ETFs make them an attractive investment option for cost-conscious investors.
- Liquidity: ETFs can be bought and sold like stocks, providing investors with the flexibility to trade them throughout the trading day. This liquidity means investors can quickly enter and exit positions, freeing up capital for other investment opportunities.
Types of ETFs
There are several types of ETFs designed to meet different investment objectives. Some of the most popular ETFs include:
| ETF type | Description |
|---|---|
| Index ETFs | Designed to track the performance of a specified market index. Examples include SPDR S&P 500 ETF and Vanguard Total Stock Market ETF. |
| Sector ETFs | Provide exposure to specific industry sectors such as healthcare, technology, financials, and energy. Examples include Energy Select Sector SPDR ETF and Technology Select Sector SPDR ETF. |
| Commodity ETFs | Invest in commodities such as gold, silver, oil, and agriculture. Examples include SPDR Gold Trust and iShares Silver Trust. |
Tax Efficiency
ETFs are more tax-efficient than mutual funds due to the unique way they are structured. When investors buy and sell mutual funds, they trigger capital gains taxes. However, ETFs only incur capital gains taxes when they are sold and even then may have lower capital gain distributions. This tax efficiency can save investors substantial amounts of money over the long run.
Overall, investing in ETFs provides investors with a cost-effective, diversified, and flexible investment option. By understanding the advantages and types of ETFs, you can build a portfolio that meets your investment objectives while minimizing risk and maximizing returns.
Acquiring Motif Investing
Acquiring Motif Investing was a strategic move for a company looking to expand its footprint in the financial technology sector. The acquisition was a hot topic in the industry and generated a lot of buzz among investors and technology observers.
- The acquisition was announced in May 2020, when Charles Schwab revealed that it would acquire Motif Investing. Charles Schwab is a well-known financial services company that provides a wide range of brokerage, banking, and financial advisory services to over 12 million clients.
- Motif Investing, on the other hand, is a technology-driven platform that enables investors to create and trade personalized portfolios, known as motifs. The company was founded in 2010 and had over 350,000 customer accounts and $850 million in assets under management at the time of the acquisition.
- The terms of the acquisition were not disclosed, but reports suggested that the deal was worth around $250 million. According to Schwab, the acquisition would allow the company to expand its offerings and reach a wider range of investors.
Following the acquisition, Motif Investing customers were informed about the changes that would take place. The company announced that it would be shutting down its platform and transferring customer accounts to Schwab’s brokerage platform. Customers were given several options, including moving their accounts to Schwab, transferring them to another broker, or liquidating their holdings.
The acquisition was seen as a positive move for both Schwab and Motif Investing. For Schwab, the acquisition represented an opportunity to expand its offerings and target a new segment of customers. For Motif Investing, the acquisition provided a way to monetize its platform and reach a larger audience.
| Pros | Cons |
|---|---|
| Increased offerings for Schwab customers | Disruption for Motif Investing customers |
| New revenue stream for Motif Investing | Potential loss of Motif Investing’s unique platform |
| Expanded reach for both companies | Possible negative impact on Motif Investing’s culture and team |
Overall, the acquisition of Motif Investing represented a strategic move for both Schwab and Motif Investing. While there were some potential downsides, the benefits for both companies outweighed the risks.
Changes after the Motif Investing Acquisition
After Schwab announced its acquisition of Motif Investing, customers were curious about the changes that would occur. The acquisition has brought about several changes in the way the online broker operates. Here are five significant alterations:
- New commission-free ETFs: Schwab has added ten new ETFs to its commission-free offering, five of which are thematic and mirrored Motif’s lineup. These ETFs provide exposure to niche areas such as artificial intelligence, cyber security, and the cannabis industry.
- Closure of Motif’s direct indexing business: Schwab has closed Motif’s direct indexing business. The move has led to job losses, and its impact has been felt by customers who relied on this service. Direct indexing allowed investors to buy individual stocks that matched the characteristics of an index or asset allocation. This approach enabled investors to benefit from tax-loss harvesting and greater control over the portfolio.
- Integration with Schwab’s platform: Schwab is integrating Motif’s technology into the company. This includes adding motifs to Schwab’s offering, enabling customers to buy and sell motifs commission-free. The move will also see the closure of Motif’s trading platform, which will now be available through Schwab’s platform.
- Consolidation of accounts: Customers with accounts at both Schwab and Motif will have their accounts consolidated into a single Schwab account. The process is expected to be seamless, and customers will have access to Schwab’s resources and tools.
- Changes to platform fees and account minimums: In October 2020, Schwab lowered its platform fees to zero, and in November 2020, Schwab eliminated its account minimums. This move was applicable to both new and existing customers and covered a wide range of accounts.
The Bottom Line
The acquisition of Motif Investing by Schwab has brought about significant changes in the online broker’s operations. While some of these changes have been welcomed, others have not. The full impact of the acquisition has yet to be felt, and customers continue to wait and see how it will affect their investments.
For investors, it is essential to keep an eye on the changes and evaluate how they impact their goals. With Schwab’s vast range of resources and tools, customers can benefit from the heightened efficiency brought about by the integration of Motif’s technology.
| Pros: | Cons: |
|---|---|
| Integration with Schwab’s platform | Closure of Motif’s direct indexing business |
| More commission-free ETFs | The closure of Motif’s trading platform |
| Consolidation of accounts | Changes to fees and account minimums |
Overall, there is no doubt that the acquisition of Motif Investing by Schwab has brought about significant changes. Some of these changes have been positive, while others have raised concerns. However, as the dust settles on this acquisition, there is a sense that it will pave the way for more efficient and cost-effective investment strategies for customers.
Best Investing Strategies with Motif Investing
Investing can be a daunting task, as there are many variables to consider. One of the most important factors is choosing the right investment strategy. Fortunately, Motif Investing makes it easy for investors to design and implement their own investment strategies. Here are six of the best investing strategies with Motif Investing:
- Growth investing: Investors who are looking for long-term capital appreciation should consider growth investing. This strategy involves investing in companies with high growth potential and strong fundamentals. Motif Investing offers several growth-oriented motifs, such as the “Digital Dollars” motif, which consists of companies that are capitalizing on the digital payments space.
- Value investing: If you are looking for stocks that are undervalued by the market, consider value investing. This strategy involves buying stocks that are trading at a discount to their intrinsic value. The “Undervalued Gems” motif is a great example of a value-oriented motif offered by Motif Investing.
- Income investing: Investors who are seeking regular income payouts should consider income investing. This strategy involves investing in stocks that pay high dividends or bonds that pay high interest. The “Dividend Stars” motif offered by Motif Investing is a great example of an income-oriented motif.
- Index investing: Index investing is a passive investment strategy that involves buying a portfolio of stocks that reflect a particular index, such as the S&P 500. The “Index Plus” motif offered by Motif Investing is a great way to invest in the overall stock market while potentially outperforming the market returns.
- Theme investing: Theme investing involves investing in companies that are related to a particular theme or trend, such as renewable energy or cybersecurity. Motif Investing offers a wide variety of themed motifs, such as the “Clean Energy” motif, which consists of companies that are focused on renewable energy sources.
- International investing: Looking to diversify your portfolio globally? Consider international investing. This strategy involves investing in companies or funds that are located outside of your home country. The “Emerging Markets” motif offered by Motif Investing is a great way to invest in the growing economies of Asia and Latin America.
Custom Strategies using Motif Investing
One of the best things about Motif Investing is that it allows investors to design and implement their own custom investment strategies. For example, an investor can create a motif that consists of companies in a particular sector and weight the stocks based on their individual preferences. Additionally, Motif Investing allows investors to personalize their portfolios by adding or removing individual stocks from a motif. This level of customization allows investors to create a portfolio that aligns with their investment goals and risk tolerance.
The Bottom Line
Investing is not a one-size-fits-all approach, and it’s important to choose an investment strategy that aligns with your personal goals and risk tolerance. Motif Investing offers a wide variety of investment strategies and motifs to help investors achieve their financial goals. Whether you are a growth investor, value investor, or income investor, Motif Investing offers a suitable investment option.
| Investing Strategy | What is it? | Examples of Motifs |
|---|---|---|
| Growth Investing | Investing in companies with high growth potential and strong fundamentals. | “Digital Dollars” |
| Value Investing | Investing in stocks that are undervalued by the market. | “Undervalued Gems” |
| Income Investing | Investing in stocks or bonds that pay high dividends or interest. | “Dividend Stars” |
| Index Investing | Investing in a portfolio of stocks that reflect a particular index. | “Index Plus” |
| Theme Investing | Investing in companies related to a particular theme or trend | “Clean Energy” |
| International Investing | Investing in companies or funds located outside of your home country. | “Emerging Markets” |
Overall, Motif Investing offers a variety of investment options that cater to different investors. Whether you are a novice investor or an experienced one, Motif Investing has something to offer. To get started, sign up for a Motif Investing account and start exploring the various investment options available.
New Investment Products Under the Acquisition
After the acquisition of Motif Investing, the new company continues to innovate and offer unique investment products to its clients. Here are some of the new investment products that you should know:
- Thematic Investing: Previously, Motif Investing offered theme-based investment portfolios for its clients. The new company continues to offer thematic investing with a new twist. The company has introduced thematic baskets that allow investors to own a diverse selection of securities in a particular theme or sector. For instance, an investor interested in the cannabis industry can invest in a thematic basket that includes companies in this industry.
- Factor-Based Investing: Some investors prefer to invest in portfolios that focus on specific factors like value, size, momentum, or volatility. The new company offers factor-based investing portfolios that leverage quantitative models to deliver exposure to specific factors. The company also offers factor-based ETFs that track popular indices like Russell and MSCI.
- Socially Responsible Investing: Investors who are interested in investing in companies that promote environmental stewardship, social responsibility, and good governance can now access socially responsible investing portfolios on the new platform. The company has teamed up with Sustainalytics to create portfolios that meet strict ethical and sustainability criteria.
Overall, the new company has introduced several investment products that cater to different investing styles and preferences. The company aims to democratize investing and provide access to sophisticated investment products to all investors regardless of their wealth status.
Commission-Free Trading
The new company offers commission-free trading for its clients on a wide range of investment products. Investors can trade stocks, ETFs, and options without paying any commission fees. The company also offers fractional trading that allows investors to buy and sell a portion of a share of a stock or ETF. This feature is beneficial for investors who want to diversify their portfolio without needing to buy a full share of a stock or ETF.
Low Account and Investment Minimums
The new company has low account and investment minimums to cater to beginner and small investors. Investors can open an account with as little as $100 and invest in portfolios with as little as $10. The low minimums make it easier for new investors to get started and learn how to invest without risking a lot of money.
Goals-Based Investing
The new company offers a goals-based investing feature that allows investors to invest according to their financial goals. Investors can create a goal like buying a house, saving for college, or retirement, and the platform will create a customized portfolio that aligns with the investor’s goal. This feature simplifies investing for investors who have specific financial goals and want a hassle-free way to invest.
| Investment Product | Description |
|---|---|
| Thematic Baskets | Diverse selection of securities in a particular theme or sector |
| Factor-Based ETFs | ETFs that track popular indices like Russell and MSCI |
| Socially Responsible Investing Portfolios | Portfolios that meet strict ethical and sustainability criteria |
The new investment products and features offered by the company make it a unique investment platform that caters to different investing styles and preferences. Investors can choose from a variety of investment products designed to meet their financial goals and risk tolerance.
Who bought Motif Investing?
1. What was Motif Investing known for before it was acquired?
2. Who is the parent company of Motif Investing now?
3. How much did Motif Investing sell for?
4. Will Motif Investing still operate independently?
5. What are the benefits of the acquisition for Motif Investing’s customers?
6. Do customers need to take any action as a result of the acquisition?
7. Will Motif Investing change its name and brand?
8. How does the acquisition affect the future plans and direction of Motif Investing?
Thanks for reading!
We hope this article has provided you with the answers you were looking for about who bought Motif Investing. With the acquisition by LPL Financial, Motif Investing will have access to additional resources and technology to enhance its already exceptional investment platform. Customers can rest easy knowing that they do not need to take any action and can continue to enjoy the same quality service they have come to expect. We’ll keep you updated on any future developments, so please visit us again soon. Thanks again for reading!