I have been using Motif Investing to build and trade stock motifs (thematic portfolios) since 2013. All I can say is that it’s a great low-cost trading platform that enables you to build custom portfolios for either short-term trading or long-term investing. At some point, I will write a more detailed review which will cover all the pros and cons of this platform. In the meantime, you can think of stock motifs as your personal ETFs or mutual funds. In this blog post, I provide a quick overview of my current motifs: ALEX (high growth), DIV (high dividends), and ZEN (all-weather portfolio based on Ray Dalio’s principles). I also explain investment strategy/philosophy behind each of them.
The High Growth Stock Motif
The ALEX motif was named after my nephew, and consists of 28 stocks from the industries with the high long-term growth potential:
- space exploration
- robotics, drones, artificial intelligence and automation
- e-commerce and financial technologies
- cloud computing
- health, genetics, and cloning
- alternative and renewable energy
I did my best to diversify this motif by including as many different industries as possible. Still, due to its “futuristic” nature, it’s heavily skewed towards technology. Is that necessarily a bad thing? I personally do not think so, but I have been seeing a lot of “expert opinions” lately on how the technology sector is “running out of steam”.
The Dividend Income Motif
The DIV stock motif pursues a completely different goal: to make money now. Specifically, it’s a portfolio of stocks that have shown steady growth and at the same time pay high dividends (at least 6%). Currently, it includes mostly REITs (mortgage, commercial, retail, and residential), and some royalty trusts. Naturally, this motif is heavily skewed towards real estate.
The All-Weather Stock Motif
Finally, ZEN motif is my (probably futile) attempt to own an “all-weather” portfolio that would allow me to beat market volatility and survive the market downtimes while yielding decent returns over the long term. The investment strategy behind such a portfolio is simple. It is a diverse and balanced mix of multiple asset classes, both inflationary and deflationary. Perhaps, the most famous all-weather portfolio is that of Bridgewater Associates, a global investment firm founded by Ray Dalio. Based on my own understanding of his principles, I came up with the motif that I believe includes all the necessary components of the “all-weather” portfolio:
- 30% US Stocks (Vanguard mid-cap growth ETF)
- 20% Bonds (Vanguard corporate bonds ETF and PIMCO inflation-protected bonds ETF)
- 15% non-US Stocks (ETFs that cover global ex-US real estate, emerging markets, and international markets)
- 15% Real Estate Stocks (Fidelity real estate ETF)
- (wild card!), the remaining 20% are allocated in Vanguard information technology ETF and Berkshire Hathaway (BRK.B).
While this portfolio may have (almost) all the right components, their allocation weights remain questionable. Lately, it has shown to be more susceptible to market downtimes. I believe, it was overexposed to real estate sector so I had to rebalance it completely from scratch.
Maintenance and Future Plans
I do rebalance all three motifs on a quarterly basis, usually at the end of each quarter. Currently, my plan is to hold ALEX for at least 5 more years. Naturally, I am also thinking about moving DIV to my Roth IRA (which I have with Motif) to minimize the taxes. As for ZEN motif, I plant to test it for another 2-3 years to see if it can beat the market.
There are certainly better performing (and professionally built) stock motifs out there. But if you decide to buy one of my motifs, please consider the following important disclosures:
The information in this blog post (and other blog posts related to finances) are based on my personal opinion and experience, and should NOT be considered professional investment advice. Seek a licensed professional for advice on this and other investment opportunities. Also please note that if you purchase one of the motifs listed above, I will earn a small commission from Motif Investing.