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Motif to End ETF Indexing Deal With Goldman

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Hardeep Walia, founder and CEO of Motif Investing, which said over the weekend it would close. (Photo: Patrick T. Fallon/Bloomberg) Hardeep Walia, founder and CEO of Motif Investing (Photo: Patrick T. Fallon/Bloomberg)

Three days after online broker Motif Investing said it was closing up shop, it also told Goldman Sachs it will no longer be its ETF partner.

Goldman Sachs Asset Management said Monday that it “was notified by Motif Capital Management Inc. that on or about May 15th Motif will cease to serve as index provider for the underlying indices for the suite of five Goldman Sachs Motif exchange-traded funds (ETFs).”

The news comes about a year after Goldman Sachs launched five ETFs in partnership with Motif, focusing on trends in data, finance, human evolution, manufacturing and consumers. The indexes are calculated by Germany’s Solactive, according to ETF Trends Chief Investment Officer and Research Dave Nadig. 

Goldman Sachs says it’s “in discussions with Motif to assume the role of index provider, subject to approval by the ETFs’ board of trustees,” according to a statement. “We do not expect any interruption to the management of the ETFs at the present time, and the ETFs continue to trade on NYSE Arca.”

“This is one of the advantages of partnering with a firm like Goldman … you now know they’ve got the customer’s back in the end,” Nadig said in a blog post on Monday. “Mechanically, I suspect this will be mostly a non-event.”

The Goldman Sachs Motif Finance Reimagined ETF (GFIN) was up 17.10% for the past month as of Monday vs. 14.2% for the Financial Select Sector SPDR Fund (XLF); for the year so far, GFIN was down about -15.7% vs. -22.3% for XLF.

Motif’s Earlier Momentum

Motif is a fintech firm based in Silicon Valley founded and led by Hardeep Walia, a former Microsoft executive. Advisors and investors can use Motif’s portfolio platforms through May 20; their accounts will move to Folio Investing on May 21. (Requests for a comment on this matter and the ETF news were not returned.) 

Some of Motif’s board members have included former Securities and Exchange Commission Chairman Arthur Levitt, J.P. Morgan Private Bank CEO Kelly Coffey and former Boston Consulting Group CEO Carl Stern.

“This combo platter of [ETF] innovators was, I thought at the time, destined to make some noise, and they did,” Nadig explained. “While asset growth hasn’t been extraordinary, the funds have found their performance footing in many cases, and I’d suspect growth to continue.”

A friend and admirer  Walia, Nadig said: “I’m personally bummed to see what might be the first COVID-19-adjacent casualty in the fintech space. I like the idea of firms like Motif and guys like Hardeep pushing the envelope, but I’m 100% sure we haven’t seen the last of his disruptive ideas.”

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