SEC Company Response from VanEck ETF Trust (CIK 0001137360) — Sep 7, 2023
VanEck ETF Trust (CIK 0001137360)
Date: Sept. 7, 2023 · CIK: 0001137360 · Accession: 0001137360-23-000670
AI Filing Summary & Sentiment
File numbers found in text: 333-123257, 811-10325
Letter
Washington, D.C. 20549 Attn: Elizabeth Bentzinger, Division of Investment Management (File Nos. 333-123257 and 811-10325)
Re: VanEck ETF Trust (the “Trust”)
Dear Ms. Bentzinger:
We are in receipt of your comments regarding the registration statement on Form N-1A (the “Registration Statement”) for the Trust with respect to VanEck Ethereum Strategy ETF (the “Fund”), a series of the Trust, filed with the Securities and Exchange Commission (the “SEC”) on August 1, 2023. The Trust has considered your comments and has authorized us to make the responses and changes discussed below to the Registration Statement on its behalf. Below, we describe the changes that have been or will be incorporated into the Fund’s Registration Statement in response to the Staff of the SEC’s (the “Staff”) comments and provide any responses to or any supplemental explanations of such comments, as requested. Capitalized terms used in our responses have the meanings attributed to such terms in the Registration Statement, unless otherwise noted.
Operations of the Ether Futures Market and Bitcoin Futures Market
Comment 1. Please supplementally confirm whether the Fund has engaged one or more Futures Commission Merchant(s) (“FCM(s)”). Please identify such FCM(s) in your response.
Response 1. The Fund is in the process of engaging its first FCM and may engage additional FCMs in the future. We will provide the identity of the first FCM to the Staff telephonically.
Comment 2. Please supplementally inform us of any discussions with potential authorized participants (“APs”) or market makers for the Fund and supplementally address the following:
· confirm the number of APs or other firms that have expressed legitimate interest and/or intent to act as an AP for the Fund (including information about the identities of such potential APs);
· discuss the ability of APs and market makers to arbitrage the Fund’s holdings in a manner that is expected to keep the Fund’s market price in line with its net asset value (“NAV”);
· discuss what instruments the APs will use to arbitrage and whether there will be any impact from the inability of broker-dealers to custody ether or bitcoin; and
· discuss whether there any unique considerations or rules related to the national securities exchange on which the Fund plans to list its securities that will impact the Fund’s ability to pursue its investment strategy, interact with APs, or otherwise impact the Fund’s operations.
Response 2. We supplementally submit that the Adviser has engaged in discussions with certain APs with respect to the Fund whose identities will be provided to the Staff telephonically. Creations and redemptions for the Fund will be primarily cash. The APs are expected to primarily use the underlying ETH Futures for hedging but could also use other correlated assets to hedge their exposure (e.g., funds with Ether exposure). In addition, we note that the Fund does not expect to be impacted by U.S. broker-dealers’ inability to custody the physical Ether, and we anticipate that the APs and market makers will be able to arbitrage the Fund’s holdings in a manner that is expected to keep the Fund’s market price in line with its NAV. We hereby confirm that the Fund does not currently expect that there will be any unique considerations or rules specific to the exchange on which the Fund plans to list that will impact the Fund’s ability to pursue its investment strategies, impact the APs, or otherwise impact the Fund’s operations.
Comment 3. Please supplementally discuss whether the Fund anticipates any capacity constraints in the ether futures market or bitcoin futures market that would limit the size of the Fund’s exposure to ether futures or bitcoin futures. Also, how would the current number of registrants looking to launch similar funds impact the ether futures market or bitcoin futures market? Explain how the Fund will monitor market capacity as new participants enter the market.
Response 3. We do not expect that the current level of existing CME-traded ETH Futures volumes and open interest positions would create capacity constraints for the Fund or otherwise limit the Fund’s ability (or the ability of similar products) to obtain the desired exposure to ETH Futures. The current volume and open interest position in CME-traded ETH Futures have increased significantly since such contracts began trading. In July 2023, the average daily notional volume and open interest positions in the most active spot-month CME-traded ETH Futures were approximately $366,204,851.25 and $381,180,801.25, respectively. We believe the current levels of futures volumes and open interest positions indicate a market of sufficient size and liquidity and, given the anticipated size of the Fund, will not create capacity constraints or exposure limits for the Fund (or similar products). Unlike the supply of equity securities, which typically is fixed by the number of shares issued, additional futures contracts may be created whenever there is sufficient interest in such contracts; consequently, we do not expect that the current number of registrants looking to launch similar funds will materially impact the ether futures market. The Fund will regularly monitor market capacity as new participants enter the market through market analysis and discussions with FCMs.
Valuation
Comment 4. Please supplementally explain how the Fund would value its Ether futures positions or bitcoin futures positions if the Chicago Mercantile Exchange (“CME”) halted the trading of ether futures or bitcoin futures due to price limits or otherwise.
Response 4. We supplementally confirm that the Fund intends to fair value its ETH Futures positions if the CME halts trading due to price limits or otherwise in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees.
Liquidity Risk Management
Comment 5. Please supplementally discuss how the Fund anticipates classifying the liquidity of ether futures investments or bitcoin futures investments and the rationale for such classification. Refer to Rule 22e-4(b)(1)(ii) of the Investment Company Act of 1940.
Response 5. We note that the market for ETH Futures has grown significantly since such contracts began trading. In July 2023, the average daily notional volume and open interest positions in the most active spot-month CME-traded ETH Futures were approximately $366,204,851.25 and $381,180,801.25, respectively. The Adviser further notes that CME-traded ETH Futures are cash settled, typically on a T+0 basis. Given current market conditions, the type of spot-month, cash-settled ETH Futures in which the Fund intends to invest, and the anticipated size of the Fund during initial periods, the Fund expects that its investments in ETH Futures to be classified as “highly liquid investments.” Under current market conditions and at the level at which the Fund is expected to invest, the Fund expects that positions in significant size would to be convertible to cash in three business days or less without the conversion to cash significantly changing the market value of such contracts.
Comment 6. Please supplementally discuss the Fund’s plans for liquidity risk management during both normal and reasonably foreseeable stressed conditions, and the board’s consideration of liquidity risks related to the investment strategy and the appropriateness of the investment strategy for an open-end fund. Refer to Rule 22e-4(b)(1)(i) of the Investment Company Act.
Response 6. As noted in Response 5, the Adviser expects ETH Futures in which the Fund invests to be considered “highly liquid investments” under current market/liquidity conditions and the anticipated Fund size and reasonably anticipated trading size. The Adviser, as the administrator of the Trust’s liquidity risk management program, will continue to evaluate the liquidity of the Fund’s investments under both normal and reasonably foreseeable stressed conditions in light of the factors set forth in Rule 22e-4 and the Fund’s portfolio investments. In addition, the Adviser notes that since ETH Futures are purchased on margin, a significant portion of the Fund’s assets typically will be held in Cash and Fixed Income Investments and will be readily available to meet redemption requests. In addition, while bid/offer spreads and volatility tend to widen and increase in stressed conditions, there is typically more volume and liquidity during such periods as well. Accordingly, the Fund believes its investment strategy is appropriate for an open-end fund.
Comment 7. Given the inability of exchange-traded funds (“ETFs”) to close to new investors and the capacity constraints posed by FCMs and the CME, please supplementally explain how the Fund will manage liquidity if the Fund becomes so large as to require more liquidity than the market can provide to meet potential redemptions.
Response 7. Position limits and market liquidity may prevent the Fund from obtaining additional exposure to ETH Futures should the Fund get too large, position limits become lower, or market liquidity deteriorates. In such cases, Fund assets not allocated to serve as margin, which is anticipated to normally be greater than 60% of the Fund’s assets based on current margin requirements for ETH Futures, will be invested in Cash and Fixed Income Investments and will be readily available to meet potential redemptions.
Derivatives Risks Management
Comment 8. Please supplementally provide an outline of the Fund’s plans for complying with Rule 18f-4 of the Investment Company Act, including a preliminary overview of the key elements of the derivatives risk management program, and confirm that the Fund will use a relative VaR test. Please also identify the designated reference portfolio used in the Fund’s relative VaR test.
Response 8. The Fund anticipates being able to achieve its investment objective while remaining in compliance with Rule 18f-4. The Fund’s Board of Trustees has adopted policies and procedures pursuant to Rule 18f-4 under the Investment Company Act and has adopted and will implement a written derivatives risk management program (the “Program”). The Program includes each of the elements required under Rule 18f-4. The Fund’s Board of Trustees, including a majority of the Fund’s independent Trustees, has approved a derivatives risk manager to administer the Program. The Fund currently expects to operate within 200% of the VaR of the Fund’s designated reference portfolio using the relative VaR test. The Fund currently plans to use the MarketVectorTM Ethereum Benchmark Rate as the Fund’s “designated index” for purposes of the “designated reference portfolio” requirement in Rule 18f-4. The designated index meets the requirements of Rule 18f-4 as it is an unleveraged index that reflects the asset class in which the Fund invests and is widely recognized and used as a benchmark in the Ethereum markets and asset class.
Simulated Performance
Comment 9. Funds taking a “long” position in ether futures contracts or a “long” position in both ether futures contracts and bitcoin futures contracts.
Please supplementally discuss how the Fund would be expected to perform during significant market downturns in the price of ether and ether futures, such as the downturn that occurred on May 19, 2021, or during significant market downturns in the price of bitcoin and bitcoin futures, such as those that occurred on June 13, 2022 and November 8 and 9, 2022.
Response 9. We believe the Fund would have operated as expected if it had been in operation on May 19, 2021 and would not have experienced any significant issues regarding obtaining the Target Exposure, processing creation and redemption requests (if any) or calculating the Fund’s NAV. While there was significant volatility and trading disruptions in Ether and ETH Futures on May 19, 2021, trading in ETH Futures continued throughout the periods with significant volume and a closing price was reported, which could have been used for purposes of the Fund’s NAV calculation. As noted, the Adviser expects the ETH Futures in which the Fund invests would be considered “highly liquid investments” under current market conditions. The Adviser, as the Fund’s liquidity program administrator, will continue to evaluate the liquidity of the Fund’s investments under both normal and reasonably foreseeable stressed conditions in light of the factors set forth in Rule 22e-4 and the Fund’s portfolio investments. ETH Futures are cash settled, typically on a T+0 basis. In addition, and as noted above, since ETH Futures are purchased on margin, a significant portion of the Fund’s assets typically will be held in Cash and Fixed Income Investments and will be readily available to meet potential redemption requests. Even during stressed markets, such as the market for ETH Futures on May 19, 2021, there was ample liquidity in the market for ETH Futures at the level at which the Fund is expected to invest. In light of the liquidity in the market and the estimated Fund size, we believe the Fund would have been able to obtain the Target Exposure or enter or exit positions in accordance with the Adviser’s judgment on May 19, 2021.
Comment 10. Funds taking a “short” position in ether futures contracts.
Please supplementally discuss how the Fund would be expected to perform during significant daily upturns in the price of ether and ether futures, such as the upturn that occurred on November 10, 2022.
Response 10. We respectfully believe this comment is not applicable to the Fund as the Fund does not intend to take “short” positions in ETH Futures.
Subsidiary
Comment 11. Funds investing in futures contracts through a subsidiary.
Please supplementally confirm that:
· the financial statements of the subsidiary will be consolidated with those of the Fund (if not, please explain why);
· the subsidiary and its board will agree to (a) inspection by the staff of the subsidiary’s books and records, which will be maintained in accordance with Section 31 of the Investment Company Act and the rules thereunder, and (b) designate an agent for service of process in the United States; and
· the subsidiary’s management fee, if any, will be included in “Management Fees,” and the subsidiary’s expenses will be included in “Other Expenses” in the Fee Table.
Response 11. We respectfully believe this comment is not applicable to the Fund because the Fund does not expect to invest in ETH Futures through a subsidiary.
Principal Investment Strategies
Where disclosure is requested, please include in the Fund’s summary prospectus.
Comment 12. Please disclose in boldface type that the Fund will not invest directly in ether or bitcoin.
Response 12. The disclosure requested is already included in the Fund’s disclosure responsive to Item 4 of Form N-1A. Accordingly, no revisions have been made in response to this comment.
Comment 13. Please supplementally confirm that the Fund will not seek economic exposure to ether, or to ether and bitcoin, that exceeds 100% of the Fund’s net assets.
Response 13. As noted in the “Summary Information—Principal Investment Strategies” section of the Prospectus, the Fund seeks to invest in ETH Futures so that the total value of the ETH to which the Fund has economic exposure is approximately 100% of the total assets of the Fund (the “Target Exposure”). Based on the current rates of taxation, we supplementally submit that, based on current estimates, approximately 100% to 125% of the Fund’s net assets will have economic exposure to ETH Futures.
Comment 14. Please disclose that the Fund will obtain exposure to ether or bitcoin only through cash-settled futures traded on an exchange registered with the Commodity Futures Trading Commission, which currently means the
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Document
September 7, 2023
U.S. Securities and Exchange Commission
Judiciary Plaza
100 F Street, N.E.
Washington, D.C. 20549
Attn: Elizabeth Bentzinger, Division of Investment Management
Re: VanEck ETF Trust (the “Trust”)
(File Nos. 333-123257 and 811-10325)
Dear Ms. Bentzinger:
We are in receipt of your comments regarding the registration statement on Form N-1A (the “Registration Statement”) for the Trust with respect to VanEck Ethereum Strategy ETF (the “Fund”), a series of the Trust, filed with the Securities and Exchange Commission (the “SEC”) on August 1, 2023. The Trust has considered your comments and has authorized us to make the responses and changes discussed below to the Registration Statement on its behalf. Below, we describe the changes that have been or will be incorporated into the Fund’s Registration Statement in response to the Staff of the SEC’s (the “Staff”) comments and provide any responses to or any supplemental explanations of such comments, as requested. Capitalized terms used in our responses have the meanings attributed to such terms in the Registration Statement, unless otherwise noted.
Operations of the Ether Futures Market and Bitcoin Futures Market
Comment 1. Please supplementally confirm whether the Fund has engaged one or more Futures Commission Merchant(s) (“FCM(s)”). Please identify such FCM(s) in your response.
Response 1. The Fund is in the process of engaging its first FCM and may engage additional FCMs in the future. We will provide the identity of the first FCM to the Staff telephonically.
Comment 2. Please supplementally inform us of any discussions with potential authorized participants (“APs”) or market makers for the Fund and supplementally address the following:
· confirm the number of APs or other firms that have expressed legitimate interest and/or intent to act as an AP for the Fund (including information about the identities of such potential APs);
· discuss the ability of APs and market makers to arbitrage the Fund’s holdings in a manner that is expected to keep the Fund’s market price in line with its net asset value (“NAV”);
· discuss what instruments the APs will use to arbitrage and whether there will be any impact from the inability of broker-dealers to custody ether or bitcoin; and
· discuss whether there any unique considerations or rules related to the national securities exchange on which the Fund plans to list its securities that will impact the Fund’s ability to pursue its investment strategy, interact with APs, or otherwise impact the Fund’s operations.
Response 2. We supplementally submit that the Adviser has engaged in discussions with certain APs with respect to the Fund whose identities will be provided to the Staff telephonically. Creations and redemptions for the Fund will be primarily cash. The APs are expected to primarily use the underlying ETH Futures for hedging but could also use other correlated assets to hedge their exposure (e.g., funds with Ether exposure). In addition, we note that the Fund does not expect to be impacted by U.S. broker-dealers’ inability to custody the physical Ether, and we anticipate that the APs and market makers will be able to arbitrage the Fund’s holdings in a manner that is expected to keep the Fund’s market price in line with its NAV. We hereby confirm that the Fund does not currently expect that there will be any unique considerations or rules specific to the exchange on which the Fund plans to list that will impact the Fund’s ability to pursue its investment strategies, impact the APs, or otherwise impact the Fund’s operations.
Comment 3. Please supplementally discuss whether the Fund anticipates any capacity constraints in the ether futures market or bitcoin futures market that would limit the size of the Fund’s exposure to ether futures or bitcoin futures. Also, how would the current number of registrants looking to launch similar funds impact the ether futures market or bitcoin futures market? Explain how the Fund will monitor market capacity as new participants enter the market.
Response 3. We do not expect that the current level of existing CME-traded ETH Futures volumes and open interest positions would create capacity constraints for the Fund or otherwise limit the Fund’s ability (or the ability of similar products) to obtain the desired exposure to ETH Futures. The current volume and open interest position in CME-traded ETH Futures have increased significantly since such contracts began trading. In July 2023, the average daily notional volume and open interest positions in the most active spot-month CME-traded ETH Futures were approximately $366,204,851.25 and $381,180,801.25, respectively. We believe the current levels of futures volumes and open interest positions indicate a market of sufficient size and liquidity and, given the anticipated size of the Fund, will not create capacity constraints or exposure limits for the Fund (or similar products). Unlike the supply of equity securities, which typically is fixed by the number of shares issued, additional futures contracts may be created whenever there is sufficient interest in such contracts; consequently, we do not expect that the current number of registrants looking to launch similar funds will materially impact the ether futures market. The Fund will regularly monitor market capacity as new participants enter the market through market analysis and discussions with FCMs.
Valuation
Comment 4. Please supplementally explain how the Fund would value its Ether futures positions or bitcoin futures positions if the Chicago Mercantile Exchange (“CME”) halted the trading of ether futures or bitcoin futures due to price limits or otherwise.
Response 4. We supplementally confirm that the Fund intends to fair value its ETH Futures positions if the CME halts trading due to price limits or otherwise in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees.
Liquidity Risk Management
Comment 5. Please supplementally discuss how the Fund anticipates classifying the liquidity of ether futures investments or bitcoin futures investments and the rationale for such classification. Refer to Rule 22e-4(b)(1)(ii) of the Investment Company Act of 1940.
Response 5. We note that the market for ETH Futures has grown significantly since such contracts began trading. In July 2023, the average daily notional volume and open interest positions in the most active spot-month CME-traded ETH Futures were approximately $366,204,851.25 and $381,180,801.25, respectively. The Adviser further notes that CME-traded ETH Futures are cash settled, typically on a T+0 basis. Given current market conditions, the type of spot-month, cash-settled ETH Futures in which the Fund intends to invest, and the anticipated size of the Fund during initial periods, the Fund expects that its investments in ETH Futures to be classified as “highly liquid investments.” Under current market conditions and at the level at which the Fund is expected to invest, the Fund expects that positions in significant size would to be convertible to cash in three business days or less without the conversion to cash significantly changing the market value of such contracts.
Comment 6. Please supplementally discuss the Fund’s plans for liquidity risk management during both normal and reasonably foreseeable stressed conditions, and the board’s consideration of liquidity risks related to the investment strategy and the appropriateness of the investment strategy for an open-end fund. Refer to Rule 22e-4(b)(1)(i) of the Investment Company Act.
Response 6. As noted in Response 5, the Adviser expects ETH Futures in which the Fund invests to be considered “highly liquid investments” under current market/liquidity conditions and the anticipated Fund size and reasonably anticipated trading size. The Adviser, as the administrator of the Trust’s liquidity risk management program, will continue to evaluate the liquidity of the Fund’s investments under both normal and reasonably foreseeable stressed conditions in light of the factors set forth in Rule 22e-4 and the Fund’s portfolio investments. In addition, the Adviser notes that since ETH Futures are purchased on margin, a significant portion of the Fund’s assets typically will be held in Cash and Fixed Income Investments and will be readily available to meet redemption requests. In addition, while bid/offer spreads and volatility tend to widen and increase in stressed conditions, there is typically more volume and liquidity during such periods as well. Accordingly, the Fund believes its investment strategy is appropriate for an open-end fund.
Comment 7. Given the inability of exchange-traded funds (“ETFs”) to close to new investors and the capacity constraints posed by FCMs and the CME, please supplementally explain how the Fund will manage liquidity if the Fund becomes so large as to require more liquidity than the market can provide to meet potential redemptions.
Response 7. Position limits and market liquidity may prevent the Fund from obtaining additional exposure to ETH Futures should the Fund get too large, position limits become lower, or market liquidity deteriorates. In such cases, Fund assets not allocated to serve as margin, which is anticipated to normally be greater than 60% of the Fund’s assets based on current margin requirements for ETH Futures, will be invested in Cash and Fixed Income Investments and will be readily available to meet potential redemptions.
Derivatives Risks Management
Comment 8. Please supplementally provide an outline of the Fund’s plans for complying with Rule 18f-4 of the Investment Company Act, including a preliminary overview of the key elements of the derivatives risk management program, and confirm that the Fund will use a relative VaR test. Please also identify the designated reference portfolio used in the Fund’s relative VaR test.
Response 8. The Fund anticipates being able to achieve its investment objective while remaining in compliance with Rule 18f-4. The Fund’s Board of Trustees has adopted policies and procedures pursuant to Rule 18f-4 under the Investment Company Act and has adopted and will implement a written derivatives risk management program (the “Program”). The Program includes each of the elements required under Rule 18f-4. The Fund’s Board of Trustees, including a majority of the Fund’s independent Trustees, has approved a derivatives risk manager to administer the Program. The Fund currently expects to operate within 200% of the VaR of the Fund’s designated reference portfolio using the relative VaR test. The Fund currently plans to use the MarketVectorTM Ethereum Benchmark Rate as the Fund’s “designated index” for purposes of the “designated reference portfolio” requirement in Rule 18f-4. The designated index meets the requirements of Rule 18f-4 as it is an unleveraged index that reflects the asset class in which the Fund invests and is widely recognized and used as a benchmark in the Ethereum markets and asset class.
Simulated Performance
Comment 9. Funds taking a “long” position in ether futures contracts or a “long” position in both ether futures contracts and bitcoin futures contracts.
Please supplementally discuss how the Fund would be expected to perform during significant market downturns in the price of ether and ether futures, such as the downturn that occurred on May 19, 2021, or during significant market downturns in the price of bitcoin and bitcoin futures, such as those that occurred on June 13, 2022 and November 8 and 9, 2022.
Response 9. We believe the Fund would have operated as expected if it had been in operation on May 19, 2021 and would not have experienced any significant issues regarding obtaining the Target Exposure, processing creation and redemption requests (if any) or calculating the Fund’s NAV. While there was significant volatility and trading disruptions in Ether and ETH Futures on May 19, 2021, trading in ETH Futures continued throughout the periods with significant volume and a closing price was reported, which could have been used for purposes of the Fund’s NAV calculation. As noted, the Adviser expects the ETH Futures in which the Fund invests would be considered “highly liquid investments” under current market conditions. The Adviser, as the Fund’s liquidity program administrator, will continue to evaluate the liquidity of the Fund’s investments under both normal and reasonably foreseeable stressed conditions in light of the factors set forth in Rule 22e-4 and the Fund’s portfolio investments. ETH Futures are cash settled, typically on a T+0 basis. In addition, and as noted above, since ETH Futures are purchased on margin, a significant portion of the Fund’s assets typically will be held in Cash and Fixed Income Investments and will be readily available to meet potential redemption requests. Even during stressed markets, such as the market for ETH Futures on May 19, 2021, there was ample liquidity in the market for ETH Futures at the level at which the Fund is expected to invest. In light of the liquidity in the market and the estimated Fund size, we believe the Fund would have been able to obtain the Target Exposure or enter or exit positions in accordance with the Adviser’s judgment on May 19, 2021.
Comment 10. Funds taking a “short” position in ether futures contracts.
Please supplementally discuss how the Fund would be expected to perform during significant daily upturns in the price of ether and ether futures, such as the upturn that occurred on November 10, 2022.
Response 10. We respectfully believe this comment is not applicable to the Fund as the Fund does not intend to take “short” positions in ETH Futures.
Subsidiary
Comment 11. Funds investing in futures contracts through a subsidiary.
Please supplementally confirm that:
· the financial statements of the subsidiary will be consolidated with those of the Fund (if not, please explain why);
· the subsidiary and its board will agree to (a) inspection by the staff of the subsidiary’s books and records, which will be maintained in accordance with Section 31 of the Investment Company Act and the rules thereunder, and (b) designate an agent for service of process in the United States; and
· the subsidiary’s management fee, if any, will be included in “Management Fees,” and the subsidiary’s expenses will be included in “Other Expenses” in the Fee Table.
Response 11. We respectfully believe this comment is not applicable to the Fund because the Fund does not expect to invest in ETH Futures through a subsidiary.
Principal Investment Strategies
Where disclosure is requested, please include in the Fund’s summary prospectus.
Comment 12. Please disclose in boldface type that the Fund will not invest directly in ether or bitcoin.
Response 12. The disclosure requested is already included in the Fund’s disclosure responsive to Item 4 of Form N-1A. Accordingly, no revisions have been made in response to this comment.
Comment 13. Please supplementally confirm that the Fund will not seek economic exposure to ether, or to ether and bitcoin, that exceeds 100% of the Fund’s net assets.
Response 13. As noted in the “Summary Information—Principal Investment Strategies” section of the Prospectus, the Fund seeks to invest in ETH Futures so that the total value of the ETH to which the Fund has economic exposure is approximately 100% of the total assets of the Fund (the “Target Exposure”). Based on the current rates of taxation, we supplementally submit that, based on current estimates, approximately 100% to 125% of the Fund’s net assets will have economic exposure to ETH Futures.
Comment 14. Please disclose that the Fund will obtain exposure to ether or bitcoin only through cash-settled futures traded on an exchange registered with the Commodity Futures Trading Commission, which currently means the