SEC Company Response from BNY Mellon ETF Trust (CIK 0001493580) — Feb 14, 2020
BNY Mellon ETF Trust (CIK 0001493580)
Date: Feb. 14, 2020 · CIK: 0001493580 · Accession: 0001493580-20-000001
AI Filing Summary & Sentiment
File numbers found in text: 333-234030, 811-23477
Letter
Via EDGAR Correspondence Division of Investment Management 100 F Street NE Washington, DC 20549 Re: BNY Mellon ETF Trust (the “Registrant”) File Nos. 333-234030 and 811-23477
Dear Ms. Hardy:
This letter responds to comments you provided on January 13, 2020, with respect to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-1A. Pre-Effective Amendment No. 1 was filed on December 3, 2019 and included disclosure with respect to the following eight series of the Registrant: BNY Mellon US Large Cap Core Equity ETF, BNY Mellon US Mid Cap Core Equity ETF, BNY Mellon US Small Cap Core Equity ETF, BNY Mellon International Equity ETF, BNY Mellon Emerging Markets Equity ETF, BNY Mellon Core Bond ETF, BNY Mellon Short Duration Corporate Bond ETF, and BNY Mellon High Yield Beta ETF.
General
1. Comment: Where a comment is made with regard to disclosure in one location, please apply to all other applicable parts of the registration statement.
Response: The Registrant has applied comments to all applicable parts of the registration statement.
Prospectus
BNY Mellon US Large Cap Core Equity Fund
2. Comment: On page 2, under “Fund Summary – Investment Objective,” please replace the word “match” with “track.” Alternatively, if the word “match” is used, please clarify that the fund will seem to match the performance of the index before fees and expenses.
Response: The Registrant has changed the word “match” to “track.”
3. Comment: On page 2, under “Fund Summary – Fees and Expenses,” please revise the paragraph prior to the table per revised Item 3 of Form N-1A. See Investment Company Act Release No. 33646.
Response: The Registrant has revised the paragraph prior to the table per revised Item 3 of Form N-1A.
4. Comment: On page 2, under “Fund Summary – Principal Investment Strategy,” please revise the following sentence to be in plain English, as an average investor may not know what it means and how it is used in the security selection process:
“The index includes the securities of companies whose cumulative total market capitalization represents approximately the top 70% of the investable universe.”
This sentence, when read with the prior sentence, is unclear with regard to whether the fund invests in all securities in the index or not. It is not clear what the purpose of the screening is and how the index eliminates 30% of the investable universe.
Response: The Registrant confirms that the fund intends to invest in all or substantially all of the securities in the index. The index performs two screens, the first is a liquidity screen of the broad U.S. equity market and the second is a market capitalization screen to identify large, medium and small market capitalization issuers. After the second screen, issuers are assigned to the Morningstar® US Large Cap IndexSM, Morningstar® US Mid Cap IndexSM or Morningstar® US Small Cap IndexSM, accordingly.
To clarify, the disclosure for the BNY Mellon US Large Cap Core Equity ETF has been revised as follows:
“The Morningstar® US Large Cap IndexSM is a float-adjusted market capitalization weighted index designed to measure the performance of U.S. large-capitalization stocks. The index’s initial universe of eligible securities includes common stock, tracking stock and shares of real estate investment trusts (REITs) issued by U.S. companies and traded on the New York Stock Exchange, NASDAQ or NYSE Market LLC. At each reconstitution, the initial universe is screened to exclude securities based on the number of non-trading days in the preceding quarter and trading volume during the preceding six-month period. The remaining securities represent the investable universe. The index includes the securities of companies whose cumulative total market capitalization represents approximately the top 70% of the remaining securities investable universe.”
5. Comment: On page 2, under “Fund Summary – Principal Investment Strategy,” please disclose the number of securities or range of number of securities in the index. This comment applies to all funds.
Response: The Registrant will include the number of securities or range of number of securities in each index as of a recent date.
6. Comment: On page 3, under “Fund Summary – Principal Investment Strategy,” please delete the term “generally” from the sentence below and specify the circumstances where the fund will not be concentrated (e.g., where the fund follows a sampling strategy). See The First Australia Fund, Inc. No Action Letter (pub. avail. July 29, 1999).
“In seeking to track the index, the fund’s assets will generally be concentrated in an industry or group of industries to the extent that the index concentrates in a particular industry or group of industries.”
Response: The Registrant has revised the disclosure as follows:
“In seeking to track the index, the fund’s assets may will generally be concentrated in an industry or group of industries only to the extent that the index concentrates in a particular industry or group of industries.”
7. Comment: On page 3, under “Fund Summary – Principal Investment Strategy,” with respect to the sentence below, please explain what “represented by” means and change to “concentrated in” if true. In addition, if the fund is concentrated in any particular industry or sector, please add appropriate risk disclosure.
“As of [ ], 2019, [ ]% of the index was represented by the [ ] industry/sector.”
Response: The Registrant has revised the disclosure as noted below and added the appropriate risk disclosure.
“As of [ ], 2019, [ ]% of the index consisted of securities of issuers in was represented by the [ ] industry/sector.”
8. Comment: On page 3, under “Fund Summary – Principal Risks,” under “Large-cap stock risk,” please supplement the discussion to note that large-cap companies may be less nimble or able to change with market conditions and that such companies are subject to greater regulation.
Response: The Registrant has revised the disclosure as follows:
“Large-cap stock risk. To the extent the fund invests in large capitalization stocks, the fund may underperform funds that invest primarily in the stocks of lower quality, smaller capitalization companies during periods when the stocks of such companies are in favor. Compared to small- and mid-capitalization companies, large-capitalization companies may be less responsive to changes and opportunities affecting their business. In addition, large-capitalization companies may be subject to greater regulation than small- and mid-capitalization companies.”
9. Comment: On page 4, under “Fund Summary – Principal Risks,” under “Non-diversification risk,” please change the word “is” to “becomes” in the following sentence:
“To the extent the fund is non-diversified, the fund may invest a relatively high percentage of its assets in a limited number of issuers.”
Response: The Registrant has made the requested change.
10. Comment: On page 4, under “Fund Summary – Performance,” we note that in response to comment 18 of the initial comment letter, you stated that each fund will use the index that it will track as the broad-based securities market index for use in its performance table. Please revise to utilize a broad-based securities index that does not reflect the market indexes in which the fund invests. It is the Staff’s position that the index that an index fund is tracking cannot be an appropriate broad-based index as it provides no comparative information. The tracking index may be provided as an additional index. See also Instructions 5 & 6 to Item 27(b)(7) of Form N-1A, which are cited by Item 4(b)(2)(iii) and Instruction 2(b) to Item 4(b)(2).
Response: The Registrant believes that the index each fund will track is an appropriate broad-based securities market index for purposes of each fund’s performance table. The Registrant understands that the Commission’s stated intent of including a broad-based securities market index was to help investors “evaluate a fund’s risk and returns relative to ‘the market.’” Investment Company Act Rel. No. 22528 (February 27, 1997). In this case, the index each fund intends to track is effectively “the market.” Further, as noted by the Commission when adopting this disclosure requirement in 1993, Form N-1A “gives a fund considerable flexibility in selecting a broad-based index that it believes best reflects the market(s) in which it invests.” Investment Company Act Rel. No. 19382
(April 6, 1993) (emphasis added). Instruction 5 to Item 27(b)(7) of Form N-1A defines an appropriate broad-based securities market index as one that “is administered by an organization that is not an affiliated person of the Fund, its investment adviser, or principal underwriter.” Each index that a fund seeks to track meets this definition, as neither Morningstar nor Bloomberg are affiliated persons of a fund, the investment adviser or principal underwriter. Further, each underlying index is widely recognized and used, and each is designed to measure the performance of a broad portion of the total investable market.1 In addition, the Registrant notes that many of the largest index fund families with series tracking the same asset classes as the funds use the respective underlying index the series tracks as the broad-based market index for purposes of the performance table benchmark. See, in particular:
Asset Class
Funds
Large Cap
iShares Morningstar Large-Cap ETF
Schwab U.S. Large-Cap ETF
Mid Cap
iShares Morningstar Mid-Cap ETF
Schwab U.S. Mid-Cap ETF
Small Cap
iShares Morningstar Small-Cap ETF
Schwab U.S. Small-Cap ETF
International
iShares Core MSCI International Developed Markets ETF
Schwab International Equity ETF
Emerging Markets
iShares Core MSCI Emerging Markets ETF
Schwab Emerging Markets Equity ETF
Core Bond
iShares Core U.S. Aggregate Bond ETF
Vanguard Total Corporate Bond ETF
Short Duration Corporate Bond
iShares Core 1-5 Year USD Bond ETF
Vanguard Short-Term Corporate Bond Index Fund
High Yield Bond
iShares iBoxx $ High Yield Corporate Bond ETF
PIMCO 0-5 Year High Yield Corporate Bond Index Exchange-Traded Fund
1 The approximate number of index components of each index that a fund seeks to track as of December 31, 2019 is as follows:
· Morningstar US Large Cap Index: 221 securities
· Morningstar US Mid Cap Index: 542 securities
· Morningstar US Small Cap Index: 737 securities
· Morningstar Developed Markets ex-US Large Cap Index: 672 securities
· Morningstar Emerging Markets Large Cap Index: 524 securities
· Bloomberg Barclays US Aggregate Total Return Index: ~11,000 securities
· Bloomberg Barclays US Corporate 1-5 Years Total Return Index: ~2,200 securities
· Bloomberg Barclays US Corporate High Yield Total Return Index: ~1,900 securities
Finally, although the Registrant knows the Commission once suggested requiring a different disclosure standard for an index-based ETF when comparing performance (see Investment Company Act Rel. No. 28193 (March 11, 2008)), which was never adopted, the Registrant is not aware of any formal Commission or Staff guidance stating that an index fund cannot use the broad-based securities market index that it tracks as its performance table’s benchmark index. This is despite that fact that the Commission has specifically considered this disclosure requirement many times since its initial adoption in 1993. The Registrant believes that each underlying index is, in fact, the appropriate broad-based securities market index. To require the Registrant to compare
itself with an index that it does not believe “best reflects the market(s) in which it invests,” we believe would be contrary to the explicit intent of the Commission.
11. Comment: On page 4, under “Fund Summary – Portfolio Management,” please state that the portfolio managers are jointly and primarily responsible for management of the fund. This comment applies to all funds.
Response: The Registrant has made the requested change.
12. Comment: On page 4, under “Fund Summary – Purchase and Sale of Fund Shares,” please revise the discussion per revised Item 6(c) of Form N-1A. See Investment Company Act Release No. 33646.
Response: The Registrant has revised the discussion per revised Item 6(c) of Form N-1A.
BNY Mellon US Mid Cap Core Equity Fund
13. Comment: On page 6, under “Fund Summary – Principal Risks,” please delete the reference to small company risk in the “Small and midsize company risk” disclosure.
Response: The Registrant has made the requested change.
BNY Mellon US Small Cap Core Equity Fund
14. Comment: On page 9, under “Fund Summary – Principal Risks,” please delete the reference to midsize company risk in the “Small and midsize company risk” disclosure.
Response: The Registrant has made the requested change.
BNY Mellon International Equity ETF
15. Comment: On page 11, under “Fund Summary – Fees and Expenses,” to the extent that acquired fund fees and expenses exceed 0.01%, please reflect such expenses in a separate line item to the fee table. This comment applies to all funds.
Response: To the extent that acquired fund fees and expenses exceed 0.01% and are not included in a fund’s unitary management fee, such expenses will be reflected in a separate line item to the fee table.
16. Comment: On page 12, under “Fund Summary – Principal Investment Strategy,” with respect to the significant exposure to a specific country or region, please add the country or region and add specific risk disclosure covering such country or region.
Response: The Registrant has added the requested disclosure.
17. Comment: On page 12, under “Fund Summary – Principal Risks,” please delete “To the extent” from the first sentence of the “Foreign investment risk” and “Large-cap stock risk” disclosure. Due to the index composition, there does not appear to be a reason to qualify this disclosure.
Response: The Registrant has made the requested change.
18. Comment: On page 13, under “Fund Summary – Principal Risks,” under the “Derivatives risk” disclosure, it states that certain derivatives are subject to liquidity risk. Please describe this liquidity risk.
Response: The Registrant has revised the relevant disclosure as follows:
“Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment, and involve greater risks than the underlying assets because, in addition to general market risks, they are subject to liquidity risk (lack of a liquid secondary market), credit and counterparty risk (failure of the counterparty to the derivatives transaction to
honor its obligation) and pricing risk (risk that the derivative cannot or will not be accurately valued).”
19. Comment: On page 13, under “Fund Summary – Principal Risks,” under the “Derivatives risk” disclosure, with regard to the LIBOR discussion, please (i) disclose if the fund will invest in instruments that will invest in or reference instruments based on LIBOR that do not include a fall-back provision that addresses how interest rates will be determined if LIBOR stops being published and how the lack of any fall-back provision will affect the liquidity of the investments and (ii) explain how the transition to any successor rate could impact the value of investments that reference LIBOR.
Response: The Registrant currently expects that only the BNY Mellon Emerging Markets Equity ETF
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bnymetft-responseletter.htm - Generated by SEC Publisher for SEC Filing
Beau Yanoshik
Associate
+1.202.373.6133
beau.yanoshik@morganlewis.com
Via EDGAR Correspondence
February 14, 2020
Jennifer R. Hardy, Esq.
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street NE
Washington, DC 20549
Re: BNY Mellon ETF Trust (the “Registrant”)
File Nos. 333-234030 and 811-23477
Dear Ms. Hardy:
This letter responds to comments you provided on January 13, 2020, with respect to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-1A. Pre-Effective Amendment No. 1 was filed on December 3, 2019 and included disclosure with respect to the following eight series of the Registrant: BNY Mellon US Large Cap Core Equity ETF, BNY Mellon US Mid Cap Core Equity ETF, BNY Mellon US Small Cap Core Equity ETF, BNY Mellon International Equity ETF, BNY Mellon Emerging Markets Equity ETF, BNY Mellon Core Bond ETF, BNY Mellon Short Duration Corporate Bond ETF, and BNY Mellon High Yield Beta ETF.
General
1. Comment: Where a comment is made with regard to disclosure in one location, please apply to all other applicable parts of the registration statement.
Response: The Registrant has applied comments to all applicable parts of the registration statement.
Prospectus
BNY Mellon US Large Cap Core Equity Fund
2. Comment: On page 2, under “Fund Summary – Investment Objective,” please replace the word “match” with “track.” Alternatively, if the word “match” is used, please clarify that the fund will seem to match the performance of the index before fees and expenses.
Response: The Registrant has changed the word “match” to “track.”
3. Comment: On page 2, under “Fund Summary – Fees and Expenses,” please revise the paragraph prior to the table per revised Item 3 of Form N-1A. See Investment Company Act Release No. 33646.
Response: The Registrant has revised the paragraph prior to the table per revised Item 3 of Form N-1A.
4. Comment: On page 2, under “Fund Summary – Principal Investment Strategy,” please revise the following sentence to be in plain English, as an average investor may not know what it means and how it is used in the security selection process:
“The index includes the securities of companies whose cumulative total market capitalization represents approximately the top 70% of the investable universe.”
This sentence, when read with the prior sentence, is unclear with regard to whether the fund invests in all securities in the index or not. It is not clear what the purpose of the screening is and how the index eliminates 30% of the investable universe.
Response: The Registrant confirms that the fund intends to invest in all or substantially all of the securities in the index. The index performs two screens, the first is a liquidity screen of the broad U.S. equity market and the second is a market capitalization screen to identify large, medium and small market capitalization issuers. After the second screen, issuers are assigned to the Morningstar® US Large Cap IndexSM, Morningstar® US Mid Cap IndexSM or Morningstar® US Small Cap IndexSM, accordingly.
To clarify, the disclosure for the BNY Mellon US Large Cap Core Equity ETF has been revised as follows:
“The Morningstar® US Large Cap IndexSM is a float-adjusted market capitalization weighted index designed to measure the performance of U.S. large-capitalization stocks. The index’s initial universe of eligible securities includes common stock, tracking stock and shares of real estate investment trusts (REITs) issued by U.S. companies and traded on the New York Stock Exchange, NASDAQ or NYSE Market LLC. At each reconstitution, the initial universe is screened to exclude securities based on the number of non-trading days in the preceding quarter and trading volume during the preceding six-month period. The remaining securities represent the investable universe. The index includes the securities of companies whose cumulative total market capitalization represents approximately the top 70% of the remaining securities investable universe.”
5. Comment: On page 2, under “Fund Summary – Principal Investment Strategy,” please disclose the number of securities or range of number of securities in the index. This comment applies to all funds.
Response: The Registrant will include the number of securities or range of number of securities in each index as of a recent date.
6. Comment: On page 3, under “Fund Summary – Principal Investment Strategy,” please delete the term “generally” from the sentence below and specify the circumstances where the fund will not be concentrated (e.g., where the fund follows a sampling strategy). See The First Australia Fund, Inc. No Action Letter (pub. avail. July 29, 1999).
“In seeking to track the index, the fund’s assets will generally be concentrated in an industry or group of industries to the extent that the index concentrates in a particular industry or group of industries.”
Response: The Registrant has revised the disclosure as follows:
“In seeking to track the index, the fund’s assets may will generally be concentrated in an industry or group of industries only to the extent that the index concentrates in a particular industry or group of industries.”
7. Comment: On page 3, under “Fund Summary – Principal Investment Strategy,” with respect to the sentence below, please explain what “represented by” means and change to “concentrated in” if true. In addition, if the fund is concentrated in any particular industry or sector, please add appropriate risk disclosure.
“As of [ ], 2019, [ ]% of the index was represented by the [ ] industry/sector.”
Response: The Registrant has revised the disclosure as noted below and added the appropriate risk disclosure.
“As of [ ], 2019, [ ]% of the index consisted of securities of issuers in was represented by the [ ] industry/sector.”
8. Comment: On page 3, under “Fund Summary – Principal Risks,” under “Large-cap stock risk,” please supplement the discussion to note that large-cap companies may be less nimble or able to change with market conditions and that such companies are subject to greater regulation.
Response: The Registrant has revised the disclosure as follows:
“Large-cap stock risk. To the extent the fund invests in large capitalization stocks, the fund may underperform funds that invest primarily in the stocks of lower quality, smaller capitalization companies during periods when the stocks of such companies are in favor. Compared to small- and mid-capitalization companies, large-capitalization companies may be less responsive to changes and opportunities affecting their business. In addition, large-capitalization companies may be subject to greater regulation than small- and mid-capitalization companies.”
9. Comment: On page 4, under “Fund Summary – Principal Risks,” under “Non-diversification risk,” please change the word “is” to “becomes” in the following sentence:
“To the extent the fund is non-diversified, the fund may invest a relatively high percentage of its assets in a limited number of issuers.”
Response: The Registrant has made the requested change.
10. Comment: On page 4, under “Fund Summary – Performance,” we note that in response to comment 18 of the initial comment letter, you stated that each fund will use the index that it will track as the broad-based securities market index for use in its performance table. Please revise to utilize a broad-based securities index that does not reflect the market indexes in which the fund invests. It is the Staff’s position that the index that an index fund is tracking cannot be an appropriate broad-based index as it provides no comparative information. The tracking index may be provided as an additional index. See also Instructions 5 & 6 to Item 27(b)(7) of Form N-1A, which are cited by Item 4(b)(2)(iii) and Instruction 2(b) to Item 4(b)(2).
Response: The Registrant believes that the index each fund will track is an appropriate broad-based securities market index for purposes of each fund’s performance table. The Registrant understands that the Commission’s stated intent of including a broad-based securities market index was to help investors “evaluate a fund’s risk and returns relative to ‘the market.’” Investment Company Act Rel. No. 22528 (February 27, 1997). In this case, the index each fund intends to track is effectively “the market.” Further, as noted by the Commission when adopting this disclosure requirement in 1993, Form N-1A “gives a fund considerable flexibility in selecting a broad-based index that it believes best reflects the market(s) in which it invests.” Investment Company Act Rel. No. 19382
(April 6, 1993) (emphasis added). Instruction 5 to Item 27(b)(7) of Form N-1A defines an appropriate broad-based securities market index as one that “is administered by an organization that is not an affiliated person of the Fund, its investment adviser, or principal underwriter.” Each index that a fund seeks to track meets this definition, as neither Morningstar nor Bloomberg are affiliated persons of a fund, the investment adviser or principal underwriter. Further, each underlying index is widely recognized and used, and each is designed to measure the performance of a broad portion of the total investable market.1 In addition, the Registrant notes that many of the largest index fund families with series tracking the same asset classes as the funds use the respective underlying index the series tracks as the broad-based market index for purposes of the performance table benchmark. See, in particular:
Asset Class
Funds
Large Cap
iShares Morningstar Large-Cap ETF
Schwab U.S. Large-Cap ETF
Mid Cap
iShares Morningstar Mid-Cap ETF
Schwab U.S. Mid-Cap ETF
Small Cap
iShares Morningstar Small-Cap ETF
Schwab U.S. Small-Cap ETF
International
iShares Core MSCI International Developed Markets ETF
Schwab International Equity ETF
Emerging Markets
iShares Core MSCI Emerging Markets ETF
Schwab Emerging Markets Equity ETF
Core Bond
iShares Core U.S. Aggregate Bond ETF
Vanguard Total Corporate Bond ETF
Short Duration Corporate Bond
iShares Core 1-5 Year USD Bond ETF
Vanguard Short-Term Corporate Bond Index Fund
High Yield Bond
iShares iBoxx $ High Yield Corporate Bond ETF
PIMCO 0-5 Year High Yield Corporate Bond Index Exchange-Traded Fund
1 The approximate number of index components of each index that a fund seeks to track as of December 31, 2019 is as follows:
· Morningstar US Large Cap Index: 221 securities
· Morningstar US Mid Cap Index: 542 securities
· Morningstar US Small Cap Index: 737 securities
· Morningstar Developed Markets ex-US Large Cap Index: 672 securities
· Morningstar Emerging Markets Large Cap Index: 524 securities
· Bloomberg Barclays US Aggregate Total Return Index: ~11,000 securities
· Bloomberg Barclays US Corporate 1-5 Years Total Return Index: ~2,200 securities
· Bloomberg Barclays US Corporate High Yield Total Return Index: ~1,900 securities
Finally, although the Registrant knows the Commission once suggested requiring a different disclosure standard for an index-based ETF when comparing performance (see Investment Company Act Rel. No. 28193 (March 11, 2008)), which was never adopted, the Registrant is not aware of any formal Commission or Staff guidance stating that an index fund cannot use the broad-based securities market index that it tracks as its performance table’s benchmark index. This is despite that fact that the Commission has specifically considered this disclosure requirement many times since its initial adoption in 1993. The Registrant believes that each underlying index is, in fact, the appropriate broad-based securities market index. To require the Registrant to compare
itself with an index that it does not believe “best reflects the market(s) in which it invests,” we believe would be contrary to the explicit intent of the Commission.
11. Comment: On page 4, under “Fund Summary – Portfolio Management,” please state that the portfolio managers are jointly and primarily responsible for management of the fund. This comment applies to all funds.
Response: The Registrant has made the requested change.
12. Comment: On page 4, under “Fund Summary – Purchase and Sale of Fund Shares,” please revise the discussion per revised Item 6(c) of Form N-1A. See Investment Company Act Release No. 33646.
Response: The Registrant has revised the discussion per revised Item 6(c) of Form N-1A.
BNY Mellon US Mid Cap Core Equity Fund
13. Comment: On page 6, under “Fund Summary – Principal Risks,” please delete the reference to small company risk in the “Small and midsize company risk” disclosure.
Response: The Registrant has made the requested change.
BNY Mellon US Small Cap Core Equity Fund
14. Comment: On page 9, under “Fund Summary – Principal Risks,” please delete the reference to midsize company risk in the “Small and midsize company risk” disclosure.
Response: The Registrant has made the requested change.
BNY Mellon International Equity ETF
15. Comment: On page 11, under “Fund Summary – Fees and Expenses,” to the extent that acquired fund fees and expenses exceed 0.01%, please reflect such expenses in a separate line item to the fee table. This comment applies to all funds.
Response: To the extent that acquired fund fees and expenses exceed 0.01% and are not included in a fund’s unitary management fee, such expenses will be reflected in a separate line item to the fee table.
16. Comment: On page 12, under “Fund Summary – Principal Investment Strategy,” with respect to the significant exposure to a specific country or region, please add the country or region and add specific risk disclosure covering such country or region.
Response: The Registrant has added the requested disclosure.
17. Comment: On page 12, under “Fund Summary – Principal Risks,” please delete “To the extent” from the first sentence of the “Foreign investment risk” and “Large-cap stock risk” disclosure. Due to the index composition, there does not appear to be a reason to qualify this disclosure.
Response: The Registrant has made the requested change.
18. Comment: On page 13, under “Fund Summary – Principal Risks,” under the “Derivatives risk” disclosure, it states that certain derivatives are subject to liquidity risk. Please describe this liquidity risk.
Response: The Registrant has revised the relevant disclosure as follows:
“Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment, and involve greater risks than the underlying assets because, in addition to general market risks, they are subject to liquidity risk (lack of a liquid secondary market), credit and counterparty risk (failure of the counterparty to the derivatives transaction to
honor its obligation) and pricing risk (risk that the
derivative cannot or will not be accurately valued).”
19. Comment: On page 13, under “Fund Summary
– Principal Risks,” under the “Derivatives risk” disclosure, with regard
to the LIBOR discussion, please (i) disclose if the fund will invest in
instruments that will invest in or reference instruments based on LIBOR that do
not include a fall-back provision that addresses how interest rates will be
determined if LIBOR stops being published and how the lack of any fall-back
provision will affect the liquidity of the investments and (ii) explain how the
transition to any successor rate could impact the value of investments that
reference LIBOR.
Response: The Registrant currently expects
that only the BNY Mellon Emerging Markets Equity ETF