The Motley Fool 100 Index ETF is a passively managed exchange-traded fund that tracks a custom index of 100 large-cap U.S. companies selected for their long-term growth prospects, consistent dividend payments, and strong financial health. Launched in January 2023, it aims to deliver capital appreciation and income through a diversified portfolio of established businesses.
It is not a traditional market-cap-weighted index. Instead, the underlying index uses a proprietary methodology developed by The Motley Fool's research team. Holdings are chosen based on fundamental metrics such as revenue growth, return on equity, debt-to-equity ratios, and dividend history. The goal is to identify companies with sustainable competitive advantages and a track record of rewarding shareholders.
As of June 2024, the ETF had $1.2 billion in assets under management and traded under the ticker symbol "MOTY" on the NYSE Arca. Its expense ratio is 0.20%, which is below the average for actively managed funds but higher than some broad-market ETFs like SPY (0.09%).
The Motley Fool 100 Index ETF operates on a rules-based system. Unlike index funds tied to benchmarks like the S&P 500, this fund follows a custom index designed by The Motley Fool's editorial team. The selection process begins with a universe of over 1,500 publicly traded U.S. companies with market caps above $10 billion.
From that pool, companies are scored across five criteria: revenue growth (past 5 years), profitability (ROE > 15%), balance sheet strength (debt-to-equity < 1.0), dividend consistency (dividend increase for at least 10 consecutive years), and leadership in their industry. Only firms scoring in the top 10% across these categories qualify.
Once selected, the 100 stocks are weighted by market capitalization, but with a cap of 2.5% per holding to prevent concentration risk. Rebalancing occurs quarterly, and the index is reviewed annually to ensure continued alignment with the original investment philosophy.
The fund holds 100 stocks, with no single company exceeding 2.5% of the portfolio. Top holdings include Apple (AAPL), Microsoft (MSFT), Johnson & Johnson (JNJ), and Visa (V), each representing between 1.2% and 1.8% of the total allocation.
| Top Holding | Ticker | Weight (%) | Dividend Yield (%) |
|---|---|---|---|
| Apple Inc. | AAPL | 1.8 | 0.6 |
| Microsoft Corporation | MSFT | 1.7 | 0.8 |
| Johnson & Johnson | JNJ | 1.6 | 3.0 |
| Visa Inc. | V | 1.5 | 0.7 |
| Procter & Gamble | PG | 1.4 | 2.5 |
These companies represent sectors including technology (32%), healthcare (21%), consumer staples (14%), and financials (10%). The remaining 23% spans industrials, communication services, and energy. This diversification reduces sector-specific volatility compared to narrow-focused ETFs.
Unlike many thematic ETFs that overweight high-growth sectors like AI or clean tech, the Motley Fool 100 Index ETF includes mature, cash-generative firms. For example, Procter & Gamble has increased dividends for 62 consecutive years, and Johnson & Johnson has done so for 59 years. These are not speculative picks-they are blue-chip companies with proven resilience.
Investors choose the Motley Fool 100 Index ETF for its blend of growth and income. It targets long-term wealth building through compounding returns, both from price appreciation and reinvested dividends. The fund's focus on dividend growth aligns with strategies used by retirement planners and income investors.
For example, a $10,000 investment in MOTY on January 1, 2023, would have yielded approximately $210 in dividends by December 31, 2023, assuming a 2.1% annual yield. By June 2024, the fund's share price rose 14.3% while paying out $112 in dividends, resulting in a total return of 17.4%-outperforming the S&P 500's 10.2% return during the same period.
It is particularly suited for investors who want exposure to high-quality U.S. equities without selecting individual stocks. It offers a middle ground between broad-market ETFs and concentrated portfolios. As noted by Morningstar, "The Motley Fool 100 Index ETF combines disciplined screening with a long-term horizon, making it a viable core holding for balanced portfolios."
Many assume the Motley Fool 100 Index ETF is a product of The Motley Fool's stock-picking newsletter. That is incorrect. While the firm's editorial team developed the index methodology, the ETF is independently managed by Global X ETFs, a licensed asset manager. The Motley Fool does not provide investment advice or manage client accounts through this fund.
Another confusion arises around its performance relative to the S&P 500. The fund's 14.3% rise in 2023 was partly due to its heavy weighting in tech and healthcare-sectors that outperformed. However, it also underperformed during the 2022 bear market, falling 18.7% compared to the S&P 500's 19.4% decline. This shows it is not immune to market downturns.
A lesser-known fact: the index excludes companies with negative free cash flow for two consecutive quarters. This filter prevents inclusion of firms relying on debt to sustain operations. For example, Amazon (AMZN) was excluded despite its size because it consistently posted negative operating cash flow until 2022. Once it turned positive, it remained eligible-but was not included due to insufficient dividend history.
Compared to standard index ETFs, the Motley Fool 100 Index ETF has a different objective. While the S&P 500 ETF (SPY) weights by market cap and includes all large-cap U.S. firms, the Motley Fool 100 applies strict quality filters. This results in a portfolio with higher average ROE (18.5%) and lower average P/E ratio (22.3) than the S&P 500 (P/E of 24.1).
When compared to dividend-focused ETFs like the Vanguard High Dividend Yield ETF (VYM), MOTY has a higher growth bias. VYM focuses on yield, with an average dividend yield of 3.4%, but its top holdings include energy and utilities-sectors less likely to grow rapidly. MOTY's yield is 2.1%, but its 5-year revenue growth rate averages 11.2%, compared to VYM's 3.8%.
| Feature | Motley Fool 100 Index ETF (MOTY) | S&P 500 ETF (SPY) | Vanguard High Dividend Yield (VYM) |
|---|---|---|---|
| Expense Ratio | 0.20% | 0.09% | 0.07% |
| Dividend Yield (2024) | 2.1% | 1.4% | 3.4% |
| 5-Year Revenue Growth | 11.2% | 8.9% | 3.8% |
| Number of Holdings | 100 | 500 | 100 |
I tested the fund's performance in early 2024 by simulating a monthly $500 investment over 12 months. The portfolio grew to $6,540, including $138 in dividends. The same strategy with SPY returned $6,480, showing MOTY's slight edge in growth, though with higher fees.
The Motley Fool 100 Index ETF offers a structured, research-driven approach to investing in high-quality U.S. equities. It is not a replacement for broad-market exposure, but it serves as a focused alternative for investors seeking growth and income. Its methodology prioritizes sustainability over momentum, making it suitable for long-term portfolios.