Anyone use Motif Investing ? Thoughts ?

[Mr Nice]

Any BITOG members use Motif Investing ? Thoughts ?
Their concept seems interesting.

I'm 80% index funds (reinvesting dividends) and 20% dividend stocks (4-11% yield).

 

[RoadRaceJosh]

I've got some money invested through FolioFN. They imitate index funds, target date funds, etc through various combinations of common stock. Say you're in the Conservative, Moderate or Aggressive 2040 Fund. There is a list of stocks and the percentages of each you'll own if you buy the "fund". It's a virtual fund so you really own all the individual stocks that make up the fund. The benefit of this is that you aren't paying high fees to Fidelity or other brokerage for managing a fund. Fees really eat up long term returns.

 

[surfstar]

All you need to know:

https://www.google.com/search?sitesearch=bogleheads.org&q=motif

 

[Hokiefyd]

This?

http://www.investopedia.com/articles/per...sks-rewards.asp

If that's what it is, I don't think I'd play in that game. The premise appears to be thematic portfolios. A few thoughts. First, you can already do this with many portfolio services. Just map out your collection and go from there. Second, a "thematic motif" necessarily means that you're exposing yourself to one sector of the market. If you're interested in that you can, again, already accomplish this. I personally believe that broad market exposure, over many years' time, is the surest way to wealth growth. You can do that with motif investing, I suppose, by using a bunch of themed motifs. But then I'd ask -- if broad market exposure is your goal, why not get a total market index fund?

In the end, I guess I see this as solving a problem that's not really there.

 

[Leo99]

Per investopedia, However, Motif is likely most beneficial for investors seeking a secondary portfolio or those with less money to invest.

I agree. I have a small amount of money at Motif and it's fun to play around with stocks and see if I can beat the "experts".

Broad market exposure is not my goal. I prefer to try to pick over performing stocks and sectors.

 

[Vuflanovsky]

I'm interested in being diversified but I'm not interested in broad market exposure if that means a Total Stock Market Index fund. If a sector like Health Care is overperforming the market then I want to be overweighted to some degree in that sector vs. an S&P 500 Fund or Total Stock Market Index fund which can do something similar ( in terms of weighting ) but with overall market factors creating that situation and not choice.

 

[surfstar]

Maybe you guys should quit your day jobs if you can simply pick stocks and sectors that will outperform.

People who do that for a living, with much more time, knowledge, and resources than you, cannot do that consistently! Good luck with your loosing bets.

 

[Vuflanovsky]

Unfortunately, it's not about picking them...it's about using them. Health care has been an outperformer for some time. There are health care funds with annualized returns of >15% over the latest ten year period including the meltdown. The market sure hasn't done that...so I don't have to bet on it as much as figure out in a diversified portfolio how "overweighted" I want to be in this sector in relation to my total portfolio. It's worked very well for me since 2010, so if doing something like that constitutes a "loosing bet" to you then you probably shouldn't be in the market.

 

[Mr Nice]

Vuflanovsky,

I understand your point of view. Energy sector is a dog, while Healthcare sector has done very well.
20% of my investments are individual stocks I use for dividend income. I own these already in my index funds.

OT: Affordable Care Act will help the healthcare / pharmaceutical industry.

 

[Hokiefyd]

Originally Posted By: Vuflanovsky
Unfortunately, it's not about picking them...it's about using them.


With respect, it is about picking them. Health care hasn't been high forever. And it won't be high forever. At some point, you have to make decisions on what you think will be hot and what you think won't be. If picking the hot sector was that easy, then every professionally-managed portfolio would look the same. Health care is overperforming? Then everyone would be in health care. If there was a secret to beating the average, then that would simply be the new average.

Some investors are like vacationers just coming back from Vegas. You hear about the money they won. You don't hear that they actually came home with less than they left with.

 

[Hokiefyd]

To add to what I said above: don't get me wrong...I'm not at all saying that there aren't certain sectors of the market that outperform the general market. I'm not saying that at all. What I am saying is the chance of any one investor being in the hot sector all the time is remotely low.

If you can do it, and you're not making money doing it for others, then you're in the wrong business.

 

[Vuflanovsky]

Originally Posted By: Hokiefyd
Originally Posted By: Vuflanovsky
Unfortunately, it's not about picking them...it's about using them.


With respect, it is about picking them. Health care hasn't been high forever. And it won't be high forever. At some point, you have to make decisions on what you think will be hot and what you think won't be. If picking the hot sector was that easy, then every professionally-managed portfolio would look the same. Health care is overperforming? Then everyone would be in health care. If there was a secret to beating the average, then that would simply be the new average.

Some investors are like vacationers just coming back from Vegas. You hear about the money they won. You don't hear that they actually came home with less than they left with.

To me, that's almost analogous to saying that Apple won't be hot forever so why invest in it. In actuality, I AM using it to a significant degree versus picking it because health care ( in case you're not aware ) has outperformed since 2011 and it becomes a situation where if I have to make a decision, do I want to ( for example ) up the percentage of health care-related issues in my portfolio from 12% to 17%?? I own a diversified health care mutual fund that has a 10 year annualized return of 19.1% and a 5 year annualized return of 29.6%. This fund has a lower correlation with the Dow and NASDAQ than the average mutual fund and will sometimes be up by 1% on days that the Dow is down 50 points or more. This same fund lost 28% in the 2008-2009 period versus 37% for the average mutual fund. While this fund has been exceptional ( along with some other healthcare funds ), I guess I'm an utter genius and should quit my day job versus just having the sector work for me in this manner described above ( as it has ) since 2010 when I bought the fund.

Granted, I don't think health care will be a high flyer forever but it currently has both head winds and tail winds that continue to mix as positive versus the market as a whole. Call me Nostradamus but I think the chances are 51% or greater that it will outperform for a fifth year. Over a 60 month period, I can hardly call that chasing the "hot" sector if you're using it in percentages to bolster your return.