SecProbe.io

CORRESP
1
filename1.htm

        111 West Monroe Street

        Chicago, Illinois 60603-4080

        T 312.845.3000

        F 312.701.2361

        www.chapman.com

April 12,
2021

VIA EDGAR CORRESPONDENCE

Elena Stojic

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:
    First Trust Exchange-Traded Fund III (the “Trust”)

    File Nos. 333-176976; 811-22245

Dear Ms. Stojic:

This letter responds
to your comments, provided by telephone, regarding the registration statement originally filed on Form N-1A for First Trust Exchange-Traded
Fund III (the “Trust”) with the staff of the Securities and Exchange Commission (the “Staff”) on
October 14, 2020 (the “Registration Statement”). The Registration Statement relates to the First Trust New York Municipal
High Income ETF (the “Fund”), a series of the Trust. Capitalized terms used herein, but not otherwise defined, have
the meanings ascribed to them in the Registration Statement.

Comment 1 – Fee Table

Please confirm that
the fee waiver is at least one year from the effective date of the Registration Statement. Additionally, if there is any opportunity for
recoupment, please disclose in the prospectus.

Response to Comment 1

The fee waiver agreement
will be in effect for at least one year following the effectiveness of the Registration Statement. Additionally, there is no opportunity
for recoupment.

Comment 2 – Principal
Investment Strategies

Please clarify whether
the disclosure relating to “New York income taxes” refers to state, city or both types of income tax. If investors would be
subject to New York City income tax, please be sure to address in the tax section.

Response to Comment 2

“New York income
taxes” refers to New York State and New York City income taxes. Disclosure has been added to the section entitled “Principal
Investment Strategies” to clarify in accordance with the comment. Additionally, the section entitled “New York Tax Status”
has been completed in the prospectus and Statement of Additional Information (“SAI”).

Comment 3 – Principal
Investment Strategies

Please provide a brief
explanation of “pre-refunded” and “escrowed to maturity bonds.”

Response to Comment 3

The following disclosure
has been added to the section entitled “Principal Investment Strategies:”

Pre-refunded bonds
are bonds that have been refunded to a call date prior to the final maturity of principal, or, in the case of pre-refunded bonds commonly
referred to as “escrowed-to-maturity bonds,” to the final maturity of principal, and remain outstanding in the municipal market.

Comment 4 – Principal
Investment Strategies

The Staff requests
an explanation if there any areas of initial finance that will have significant exposure such as airports or toll roads, that may have
been affected by the COVID-19 pandemic. If so, please consider the need for more tailored risk disclosure and strategy disclosure on how
the Fund will evaluate and value these investments.

Response to Comment 4

The Fund does not
expect to have significant exposure to these areas, however, because of the impact of the COVID-19 pandemic on the municipal securities
market, the following disclosure has been added to the end of the “Municipal Securities Risk:”

Due to the COVID-19
pandemic, the risks of the municipal securities market have been magnified. The costs associated with combating the pandemic and the negative
impact on tax revenues has adversely affected the financial condition of many states and political subdivisions. These risks may also
adversely affect several sectors of the municipal bond market, such as airports, toll roads, hospitals and colleges, among many others.
The full impact of the COVID-19 pandemic on state and political subdivisions’ ability to make payments on debt obligations is impossible
to predict, but could negatively impact the value of bonds, the ability of state and political subdivisions to make payments when due
and the performance of the Fund.

    -2-

Comment 5 – Principal
Risks

The Staff notes the
risks are currently in alphabetical order. Please consider ordering the risks to prioritize those that are most likely to adversely the
affect the Fund’s NAV, yield and total return.

Response to Comment 5

The Fund respectfully
declines to revise the disclosure as requested by the Staff. Ultimately, the Fund has reached the same conclusion as many other industry
participants and declines to make the requested revisions as it believes the disclosure is compliant with the requirements of Form N-1A.

Comment 6 – Principal
Risks

In the “Custodial
Receipts Trust Risk,” there is a reference to “inverse floater securities.” Please disclose “inverse floater securities”
in the section entitled “Principal Investment Strategies.”

Response to Comment 6

The Fund respectfully
declines to revise the disclosure as requested by the Staff. The Fund does not anticipate that it will have significant investments in
custodial receipts. Therefore the “Custodial Receipts Trust Risk” has been moved to the section entitled “Risks of Investing
in the Fund – Non-Principal Risks” and references to custodial receipts have been removed from the sections entitled “Principal
Investment Strategies” and “Fund Investments – Principal Investments.”

Comment 7 – Principal
Risks

The Staff notes the
Fund’s “Derivatives Risk,” but there is no corresponding disclosure in the section entitled “Principal Investment
Strategies.” The Staff requests clarification if this relates to the “Custodial Receipts Trust Risk” or if the risk
should be removed because it is not material.

Response to Comment 7

Investing in derivatives
is not part of the Fund’s principal investment strategies, and therefore the “Derivatives Risk” has been moved to the
section entitled “Risks of Investing in the Fund – Non-Principal Risks.”

Comment 8 – Principal
Risks

Similar to the Derivatives
Risk, please confirm that the “Index Constituent Risk” is a principal risk and should be disclosed. Otherwise, please remove
the risk.

    -3-

Response to Comment 8

In accordance with
this comment, “Index Constituent Risk” has been moved to the section entitled “Risks of Investing in the Fund –
Non-Principal Risks.”

Comment 9 – Principal
Risks

The Staff notes that
the first sentence of the “Industrial Development Bond Risk” describes these types of bonds. Please move this sentence to
the section entitled “Principal Investment Strategies,” rather than keeping it as risk disclosure.

Response to Comment 9

The referenced disclosure
has been moved in accordance with this comment.

Comment 10 – Principal
Risks

The Staff notes the
Registration Statement discloses a “State-Specific and U.S. Territories’ Concentration Risk.” The Staff requests that
any state-specific risk associated with Puerto Rico, the U.S. Virgin Islands or Guam should also be disclosed.

Response to Comment 10

In accordance with
this comment, the “Puerto Rican Municipal Securities Risk” has been moved to the principal risk sections.

Comment 11 – Principal
Risks

The Staff notes “Zero
Coupon Bond Risk” is listed as a principal risk. Please consider whether this should be disclosed in the section entitled “Principal
Investment Strategies” as well.

Response to Comment 11

Investing in zero
coupon bonds is not part of the Fund’s principal investment strategies, therefore the “Zero Coupon Bond Risk” has been
moved to the section entitled “Risks of Investing in the Fund – Non-Principal Risks.”

Comment 12 – Fund Investments

The prospectus states,
“In addition, Municipal Securities include securities issued by tender option bond (“TOB”) trusts and custodial receipt
trusts, each of which are investment vehicles the underlying assets of which are municipal bonds.” The Staff requests that tender
option bonds be disclosed in the summary strategy section of the prospectus. Additionally, in supplemental correspondence, please confirm
that if these are included in the Fund’s 80% test, they should be valued at market value instead of notional value.

    -4-

Response to Comment 12

The Fund respectfully
declines to revise the disclosure as requested by the Staff. The Fund does not anticipate that it will have significant investments in
TOB trusts. Therefore, the reference to TOB trusts has been removed from the section entitled “Fund Investments – Principal
Investments.” Additionally, the Fund confirms that these securities will be valued at market value instead of notional value for
purposes of the Fund’s 80% test.

Comment 13 – Fund Investments

The Staff notes that
the Pre-Refunded and Escrowed-to-Maturity Bonds section states, “In escrow funds for ETM refunded municipal bonds, the maturity
schedules of the securities in the escrow funds match the regular debt-service requirements on the bonds as originally stated in the bond
indentures.” The Staff requests this sentence be revised in plain English so that a reasonable investor may understand.

Response to Comment 13

In accordance with
the comment, the referenced disclosure has been revised to the following:

ETM municipal bonds
in escrow funds have maturity schedules that match the regular debt-service requirements on the bonds as originally stated in the bond
indentures.

Comment 14 – Fund Investments

The Staff notes the
prospectus states, “The Fund may invest up to 100% of its net assets in Municipal Securities that pay interest that generates income
subject to federal and state alternative minimum tax.” Please consider whether this should be disclosed in the summary strategy
section.

Response to Comment 14

The prospectus has
been revised in accordance with the comment.

Comment 15 – Fund Investments

The Staff notes the
prospectus states, “The Fund’s investments in derivative instruments will be consistent with the Fund’s investment objectives
and the 1940 Act and will not be used to seek to achieve a multiple or inverse multiple of an index.” Please clarify this sentence
or remove if it is not needed.

Response to Comment 15

The referenced disclosure
has been removed from the prospectus.

    -5-

Comment 16 – Risks of
Investing in the Fund

The “Credit
Risk” in the section entitled “Risks of Investing in the Fund” states “high yield and comparable unrated debt
securities.” If this is the first mention of “high yield” securities, please reference these as “junk bonds.”

Response to Comment 16

The first mention
of high yield securities is in the section entitled “Principal Investment Strategies” where they are described as “junk
bonds.”

Comment 17 – Risks of
Investing in the Fund

The Staff notes that
several of the non-principal risks in Item 9 are referenced in the section entitled “Principal Investment Strategies.” If
these risks are not considered principal, please remove these references from the Principal Investment Strategies. Additionally, please
confirm that for every principal investment strategy, there is a corresponding principal risk.

Response to Comment 17

The prospectus has
been revised in accordance with the comment and the Fund confirms that for every principal investment strategy, there is a corresponding
principal risk.

Comment 18 – Statement
of Additional Information

The Staff notes that
the Fund’s fundamental policy number (7) states the concentration restriction does not apply to “securities of other investment
companies.” Please confirm that the Fund will look through to any underlying securities when determining concentrations.

Response to Comment 18

The Fund confirms
that it will will look through to any underlying securities when determining concentrations, to the extent the Fund has sufficient information
about such investments. Additionally, the following disclosure has been added to the SAI:

For purposes of
applying restriction (7) above, to the extent the Fund invests in other investment companies, it will consider the investments of the
underlying investment companies when determining compliance with the limitation set forth in number (7) above, to the extent the Fund
has sufficient information about such investments.

Comment 19 – Statement
of Additional Information

The Staff notes that
the Fund states, “For purposes of applying restriction (7) above, Municipal Securities issued to finance a specific project, such
as industrial development and private activity bonds, are not excluded from the Fund’s 25% industry concentration limit, as they
are considered to be in the industry of the relevant project, consistent with the Fund’s non-fundamental policy in item (5) below.”
Please remove the brackets around this sentence and reconcile the disclosure as there is no “item (5)” listed.

    -6-

Response to Comment 19

The SAI has been revised
in accordance with this comment.

********

Please call me at (312) 845-3484 if you have any questions
or issues you would like to discuss regarding these matters.

    Sincerely yours,

    Chapman and Cutler
    llp

    By:
    /s/ Morrison C. Warren

    Morrison C. Warren

    -7-