Your favourite NHL team may soon have an ETF, but is it investing or gambling?

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Photo by Bruce Bennett/Getty Images filesAn American investment company has filed to launch a series of exchange-traded funds that will allow hockey fans to speculate on the performance of NHL teams, but some investment professionals say the products sound a lot like gambling by another name.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountOn Friday, Volatility Shares Trust filed a prospectus with the U.S. Securities and Exchange Commission (SEC) outlining plans to create 32 individual ETFs tied to every team in the NHL. The Florida-based firm specializes in leveraged, crypto-linked and volatility-linked ETFs.Each of the NHL team funds would track a benchmark index based on 55 statistical measures that would provide “continuous, live statistical values” for each team, according to the SEC filing.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againThe ETFs would hold futures contracts tied to those indices and would not involve equity in the teams or any form of ownership.Using the Toronto Maple Leafs ETF as an example, positive actions (Auston Matthews scoring a goal) would add value to the ETF, while negative ones (Max Domi getting a penalty) would subtract value. If the price of the fund’s futures contract rises, investors would make money.“The prices of futures contracts are expected to rise when the team performs well statistically and to fall when the team performs poorly,” according to the SEC filing.Each index would have a standard base value of 7,500, then move up or down in real time based on statistics and during regular and post-season play before resetting each season.The prospectus notes that the price of a particular team’s futures contracts “may not be an accurate measure” of the corresponding index. For example, there’s no guarantee that the performance of Maple Leafs Index futures contracts will be “highly correlated” to the performance of the Maple Leafs Index.Every team is also susceptible to risks that effect on-ice performance including “player injuries, suspensions, trades, retirements, coaching changes, front-office turnover, league sanctions, labour disputes (and) lockouts.”The proposed ETFs appear to be “very similar” to prediction markets, said Dimitri Busevs, president and chief executive of RBC Direct Investing. He said the risk of public harm and exploitation is high with speculative investment products, particularly among younger generations and early-stage investors.“We have certainly seen it with crypto. There’s a draw to these alternative assets that offer more upside in return for more risk. There’s that whole YOLO (you only live once) mentality from the early days of meme stocks,” Busevs said. “We think there’s a real danger that you may end up misleading a whole generation in terms of what investing is and what it isn’t.”The ETF has no “financial instrumentation” around it but is rather about people engaging to win or lose money, which “really looks, feels and smells like gambling,” said Samer Nusier, vice president and managing director of product and strategy of RBC Direct Investing and InvestEase.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.“If you invest money into a company, you are expecting to get paid either through some kind of distribution of dividends or interests, or through capital appreciation, because they are making money and building things,” Nusier said. “This is really meant for entertainment value and to move money around from one person to another without necessarily creating anything other than for whoever takes a fee for offering it.”Regulators need to distinguish between innovation that supports vibrant capital markets and innovation that is “simply speculation dressed up as finance,” said Jean-Paul Bureaud, executive director of the non-profit investors’ rights advocate FAIR Canada.“A tradable financial product that lets people bet on the outcome of a Maple Leafs season has little to do with capital formation, investment, or economic growth,” Bureaud said in an email. “It’s gambling repackaged as finance.”Volatility Shares LLC, which serves as investment adviser, declined to comment.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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