Ezra Levant’s Rebel fund with a cause: What could go wrong?

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If you're concerned that the far right isn't generating enough xenophobic content, then Ezra Levant has a deal for you: Invest your savings in the Rebel Freedom Fund and watch the anger flow.

The pitch: You get a stable source of income and he gets some much-needed funding to keep the lights on at The Rebel, his floundering online hub for Islamophobes and climate-change deniers.

And hey, it's also eligible for registered retirement savings plans. But be warned: Even acolytes of the far right may find the fund has less substance than Mr. Levant's famously shrill videos.

The Wells Plus 6ix Rebel Freedom Fund is run by Wells Asset Management, a loyal Rebel supporter based in Lloydminster, Alta. The firm says the fund will provide a "modest, regular, steady income" with minimal volatility and a low correlation to most other assets when it officially launches next month.

Best of all, from the point of view of Rebel supporters, the fund will put your retirement savings alongside The Rebel's anti-immigrant campaigns – an ideological alignment that appears to underpin The Rebel founder's claim, made in an online promotional video, that the fund is an "ethical investment."

Ethical investing usually conjures up funds that put their money into clean energy or businesses with diverse boards and progressive labour practices. This fund, on the other hand, will finance The Rebel's projects, which tend to attack these kind of liberal ideals.

According to Dale Wells, portfolio manager and the chief executive officer of Wells Asset Management, "examples of possible projects include TV-style shows, documentary films, web content, online apps and even real estate such as studios."

If you're wondering how these projects are supposed to generate moderate income with minimal volatility, then you're probably not alone.

Here's how it is supposed to work, in theory. Wells Asset Management uses money in the fund to finance The Rebel's projects through short– and medium-term loans of one to three years. It takes a 4-per-cent cut in the form of a fixed management fee, paid by the fund.

Whatever The Rebel pays back to the fund in the form of debt servicing – Wells Asset Management is hoping for a 4-per-cent rate of return after fees – goes to investors. Commercial success for any project could provide additional returns.

What could possibly go wrong?

For starters, that 4 per cent envisioned return is in line with what a legitimate television production company might pay for a bank loan, but seems awfully low given the risks associated with any bet on The Rebel.

The media company was pummelled last year after its sympathetic coverage of neo-Nazi protests in Charlottesville, Va. Norwegian Cruise Lines cancelled a Rebel-hosted event. Key Rebel contributors fled. And many brands pulled their advertisements from the website in the wake of consumer pressure, raising questions about how The Rebel will keep going.

Add to this mess the fact that a great many media organizations are struggling to generate revenue these days, and it is difficult to see a clear way for The Rebel to service its loans beyond seeking additional handouts from its supporters.

Indeed, the risk of losing money in the Freedom Fund appears to outweigh the modest potential returns, even if everything goes right. You can get a bigger payout from a utility stock right now: TransCanada Corp. pays a dividend yield of 4.8 per cent.

In an interview, Mr. Wells acknowledged that the media industry is volatile, but said that he is reasonably confident that the fund can diversify beyond The Rebel and into the broader entertainment sector. "I see The Rebel as an opportunity for growth. I think that the conservative market is a growth market, and I think it has a lot of potential," Mr. Wells said.

He added: "But in the event that, for whatever reason, let's say the income stream or the projects dry up at The Rebel, we would find investments elsewhere." He pointed to movie financing as an example, where he has some experience as an executive producer.

Fund documents, however, make it clear the fund intends to find "the majority of its investment opportunities through Rebel Media," at least at first.

Brave investors should probably pray for diversification. According to the fund's information memorandum, investors "could be held personally liable for obligations of the fund" in some circumstances, meaning that more than your initial investment in the fund is potentially at risk here. (Mr. Wells promises to minimize that risk.)

If investors decide to exit the fund en masse because something dreadful has happened to The Rebel – and you don't have to be a cappuccino-swilling liberal to imagine the possibilities here – managers have the right to suspend redemptions.

Of course, ethical investing has always been about more than hard returns. It's about using your investment dollars to make a difference, to promote something you believe in.

Perhaps that's what Mr. Levant meant when he called the Rebel Freedom Fund an ethical investment: If you believe in hate, returns don't matter.