Motif Investing announced that it has partnered with Renren, one of China’s largest online social networking platforms, to receive $40 million in funding. According to Motif Investing, the $40 million investment will help them in expanding their product internationally.
Among a new breed of innovative financial products aiming to disrupt the existing brokerage services industry, Motif Investing provides thematic investing solutions to users. Similar to low cost online stock trading platforms, with Motif Investing customers place trades for a commission of $9.99, which is well below that of full service brokers.
The twist that Motif Investing brings is that rather than trade a specific stock, users invest in Motifs which are composed of up to 30 companies within the same investment theme or idea with the single $9.99 order. The product is similar to ETFs which are baskets of stocks following different indexes or industries. What Motif Investing adds is the ability for users to customize the weightings of stocks in each motif, thereby making them into dynamic ETFs.
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One of the knocks against Motif Investing is that it is currently limited to US equities. As such, the motifs are driven by industry themes and emerging ideas and have less exposure to global equity trends. As such, the current investment from Renren and exposure to China could provide additional reach for the investment firm to expand its motif coverage. With Motif Investing’s platform also including a social site for users to discuss investing trends, the partnership with Renren also provides them an experienced ally to assist them in growing their online community.
Also worth mentioning, and noted by an astute reader, is that the funding marks the second investment by a Chinese firm into the social trading sector. Last month, social trading broker, eToro, confirmed that Chinese Ping An Ventures had participated in a $27 million funding round. The funding was viewed as strategic and would help eToro expand its presence within China.
Commenting on the news, Renren Founder Joe Chen, who is also joining Motif Investing’s board stated, “We believe Motif Investing is the kind of company that can transform markets. Its disruptive technology has broad application to retail and institutional investing in the US and international markets.”
Hardeep Walia, CEO and founder of Motif Investing, added,“Joe is one of the most respected pioneers in China’s thriving Internet market. I am thrilled to have him on our Board and look forward to working with him as we consider the complexities of being a global company.”