Correspondence 0000919574-23-001775 from AB Active ETFs, Inc. (CIK 0001496608)
AB Active ETFs, Inc. (CIK 0001496608)
Date: Feb. 21, 2023 · CIK: 0001496608 · Accession: 0000919574-23-001775
AI Filing Summary & Sentiment
File numbers found in text: 333-263818, 811-23799
Letter
Via EDGAR CORRESPONDENCE Division of Investment Management Securities and Exchange Commission - AB US High Dividend ETF - AB Disruptors ETF Post-Effective Amendment No. 1 File Nos. 333-263818 and 811-23799
Dear Mr. Worthington:
This letter responds to additional comments of the staff (the “Staff”) of the Securities and Exchange Commission (“SEC”) regarding: (1) the above-referenced post-effective amendment to the registration statement filed on November 7, 2022 (the “Post-Effective Amendment”), on Form N-1A for AB US Low Volatility Equity ETF, AB US High Dividend ETF and AB Disruptors ETF (each, a “Fund”), each a series of AB Active ETFs, Inc. (“Registrant”); (2) Registrant’s initial response letter to Staff comments on the Post-Effective Amendment, which was filed via EDGAR correspondence on February 14, 2023 (“Initial Letter”); and (3) Post-Effective Amendment No. 5 to Registrant’s registration statement filed on February 14, 2023. You provided additional Staff comments to me by telephone on February 16, 2023.
The Staff’s comments and our responses thereto on behalf of Registrant and each Fund are set forth below.
General
Comment 1: The Staff reiterates Comment 1 from the Initial Letter. With respect to the 80% test for each Fund, please include “borrowings for investment purposes.” The Staff notes that this language is included in Rule 35d-1 and is standard language across the industry.
Response: Registrant believes that its current disclosure is consistent with the requirements of Rule 35d-1 under the Investment Company Act of 1940. As previously indicated, “borrowings for investment purposes” is included in determining compliance with the referenced 80% investment policy. Furthermore, because the Funds do not intend to engage in borrowing for investment purposes as a principal investment strategy, Registrant believes that disclosure in the Prospectus is not appropriate or necessary. Registrant respectfully declines to revise the Prospectus in response to this comment.
AB US High Dividend ETF
Comment 2: The Staff reiterates Comment 2 from the Initial Letter. The Staff notes that the 80% test should be with respect to dividends. The Staff notes that they do consider dividends a type of asset and not a strategy. The Staff notes, however, that the Fund is able to define “dividend” as it sees fit.
Response: After careful consideration of the Staff’s comment, Registrant continues to maintain its position that Rule 35d-1 does not require the Fund to adopt a policy to invest at least 80% of its assets in securities of U.S. companies that pay dividends. The use of “Dividend” in the Fund’s name is comparable to using “income” in the name as it refers to the investment strategy employed by the Fund. The disclosure indicates that “the Fund invests in companies that are determined to be attractive by the Adviser with an emphasis on income generation.” Under current staff guidance “income” is not subject to the requirements of Rule 35d-1. The Fund seeks to implement this investment strategy by investing in equity securities (i.e., a type of investment as contemplated by Rule 35d-1). Whether a distribution by an issuer is a dividend is a question determined by the issuer at the time it makes a distribution. For purposes of the Fund, Registrant believes that a company that pays dividends is properly considered an “equity” type of investment. Registrant respectfully declines to revise the Prospectus in response to this question.
* * *
If you have any additional comments or questions, please contact Paul M. Miller or the undersigned at (202) 737-8833 or Alexandra K. Alberstadt at (212) 574-1217.
Sincerely,
/s/
Lauren A. Clise
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CORRESP
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Seward & Kissel LLP
901 K Street, NW
Suite 800
Washington, DC 20001
Telephone: (202) 737-8833
Facsimile: (202) 737-5184
www.sewkis.com
February 21, 2023
Via
EDGAR CORRESPONDENCE
Timothy Worthington
Division of Investment Management
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re:
AB Active ETFs, Inc.
- AB US Low Volatility Equity ETF
- AB US High Dividend ETF
- AB Disruptors ETF
Post-Effective Amendment No. 1
File Nos. 333-263818 and 811-23799
Dear Mr. Worthington:
This letter responds to
additional comments of the staff (the “Staff”) of the Securities and Exchange Commission (“SEC”) regarding: (1)
the above-referenced post-effective amendment to the registration statement filed on November 7, 2022 (the “Post-Effective Amendment”),
on Form N-1A for AB US Low Volatility Equity ETF, AB US High Dividend ETF and AB Disruptors ETF (each, a “Fund”), each a series
of AB Active ETFs, Inc. (“Registrant”); (2) Registrant’s initial response letter to Staff comments on the Post-Effective
Amendment, which was filed via EDGAR correspondence on February 14, 2023 (“Initial Letter”); and (3) Post-Effective Amendment
No. 5 to Registrant’s registration statement filed on February 14, 2023. You provided additional Staff comments to me by telephone
on February 16, 2023.
The Staff’s comments
and our responses thereto on behalf of Registrant and each Fund are set forth below.
General
Comment 1: The Staff
reiterates Comment 1 from the Initial Letter. With respect to the 80% test for each Fund, please include “borrowings for investment
purposes.” The Staff notes that this language is included in Rule 35d-1 and is standard language across the industry.
Response: Registrant believes that its current disclosure is consistent with the requirements of Rule 35d-1 under
the Investment Company Act of 1940. As previously indicated, “borrowings for investment purposes” is included in determining
compliance with the referenced 80% investment policy. Furthermore, because the Funds do not intend to engage in borrowing for investment
purposes as a principal investment strategy, Registrant believes that disclosure in the Prospectus is not appropriate or necessary. Registrant
respectfully declines to revise the Prospectus in response to this comment.
AB US High Dividend ETF
Comment 2: The Staff
reiterates Comment 2 from the Initial Letter. The Staff notes that the 80% test should be with respect to dividends. The Staff notes that
they do consider dividends a type of asset and not a strategy. The Staff notes, however, that the Fund is able to define “dividend”
as it sees fit.
Response: After careful consideration of the Staff’s comment, Registrant continues to maintain its position
that Rule 35d-1 does not require the Fund to adopt a policy to invest at least 80% of its assets in securities of U.S. companies that
pay dividends. The use of “Dividend” in the Fund’s name is comparable to using “income” in the name as it
refers to the investment strategy employed by the Fund. The disclosure indicates that “the Fund invests in companies that are determined
to be attractive by the Adviser with an emphasis on income generation.” Under current staff guidance “income”
is not subject to the requirements of Rule 35d-1. The Fund seeks to implement this investment strategy by investing in equity securities
(i.e., a type of investment as contemplated by Rule 35d-1). Whether a distribution by an issuer is a dividend is a question determined
by the issuer at the time it makes a distribution. For purposes of the Fund, Registrant believes that a company that pays dividends is
properly considered an “equity” type of investment. Registrant respectfully declines to revise the Prospectus in response
to this question.
* * *
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If you have any additional
comments or questions, please contact Paul M. Miller or the undersigned at (202) 737-8833 or Alexandra K. Alberstadt at (212) 574-1217.
Sincerely,
/s/
Lauren A. Clise
Lauren A. Clise
cc:
Nancy E. Hay, Esq.
Stephen J. Laffey, Esq.
Paul M. Miller, Esq.
Alexandra K. Alberstadt, Esq.
Lancelot A. King, Esq.
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