Correspondence 0001445546-25-001236 from FIRST TRUST EXCHANGE-TRADED FUND VI (CIK 0001552740)
FIRST TRUST EXCHANGE-TRADED FUND VI (CIK 0001552740)
Date: Feb. 12, 2025 · CIK: 0001552740 · Accession: 0001445546-25-001236
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File numbers found in text: 333-182308, 811-22717
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Chapman and Cutler LLP
320 South Canal Street, 27th Floor
Chicago, Illinois 60606
T 312.845.3000
F 312.701.2361
www.chapman.com
February 12, 2025
VIA EDGAR
CORRESPONDENCE
Emily Rowland
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
First Trust Exchange-Traded Fund VI (the “Trust”)
File Nos. 333-182308; 811-22717
Dear Ms. Rowland:
This letter responds
to your comments regarding the registration statement filed on Form N-1A for First Trust Exchange-Traded Fund VI (the “Registrant”
or “Trust”) with the staff of the Securities and Exchange Commission (the “Staff”) on December 6,
2024 (the “Registration Statement”). The Registration Statement relates to the First Trust Small Cap BuyWrite 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 – General
The Staff reminds
the Registrant and its management that they are responsible for the accuracy and adequacy of the disclosures, notwithstanding any review,
comments, action or absence of action by the Staff. Where a comment is made in one location, it is applicable to all similar disclosures
appearing elsewhere in the Registration Statements. Please ensure that corresponding changes are made to all similar disclosure.
Please provide responses
to all of the Staff’s comments on EDGAR at least five business days before the effective date of the Registration Statements. Once
the correspondence is filed, please provide notice by email and include a redline showing any changes.
Please note that where
a comment is made in one Fund such comment should be addressed in all other Funds where it applies in the respective Registration Statement.
Response
to Comment 1
The Registrant confirms
that corresponding changes made in response to the Staff’s comments have been made to any similar disclosure throughout the Registration
Statements and that it will provide the Staff with a response letter in the form of correspondence at least five business days before
effectiveness. The Registrant further confirms it will provide a copy of the correspondence and corresponding redline of the Registration
Statements to the Staff once filed.
Comment
2 – Fees and Expenses of the Fund
Please supplementally
provide a completed fee table and expense examples for the Funds.
Response
to Comment 2
A completed fee table
and expense examples applicable to each Fund has been attached hereto as Exhibit A.
Comment
3 – Principal Investment Strategies
The Staff notes the
disclosure states, “Under normal market conditions, the Fund will pursue its investment objectives by investing primarily in small
cap equity securities listed on U.S. exchanges and by utilizing a buy-write “option strategy” consisting of writing (selling)
U.S. exchange-traded call options on the Russell 2000 Index (the “Russell 2000 Index”) or small cap equity exchange-traded
funds (the “Underlying ETFs”).
(a) If accurate, please add “covered” before “exchange-traded call options”
(b) If options utilized as a part of the buy-write strategy will not be covered, please revise the disclosure
throughout the Registration Statement to state this.
(c) Please revise the disclosure to state what is meant by covered or uncovered call options.
Response
to Comment 3
The Registrant notes
that not all of the written options will be covered. In accordance with the Staff’s comment, the following disclosure has been added
to the Principal Investment Strategies section:
“The call
options that the Fund will write (sell) on the Russell 2000 Index or the Underlying ETFs will technically be “uncovered”.
A written (sold) call option is “covered” when an investor (such as the Fund) owns the security serving as the reference asset
for the call option and is “uncovered” when an investor (such as the Fund) does not own the security serving as the reference
asset. While the potential losses on uncovered call options are theoretically unlimited, the Fund will hold individual stocks comprising
the Russell 2000 Index and Underlying ETFs that will serve to hedge the risk associated with the Fund’s sale of options referencing
the Russell 2000 Index and/or the Underlying ETFs.”
Comment
4 – Principal Investment Strategies
The
Staff notes the disclosure states, “Under normal market conditions, the Fund will invest at least 80% of its net assets (plus
borrowings for investment purposes) in small cap equity securities or instruments (including options contracts) that provide exposure
to small cap equity securities. For purposes of this investment test, derivative contracts (such as option contracts) will be valued using
their notional value.”
(a) Please clarify in the disclosure whether the word “instrument” is referring to the same concept
as “derivative contracts” as referred to later in the above-referenced disclosure.
(b) Please clarify, either in the Fund’s 80% investment policy or principal investment strategies section,
if derivatives other than options will be utilized by the Fund.
Response
to Comment 4
Please refer
to the Registrant’s responses below.
(a) The disclosure will be revised in accordance with the Staff’s comment.
(b) The Registrant notes that the disclosure has been revised to note that the Fund may, on a non-principal
basis, invest in other derivatives. Please refer to Response to Comment 20.
Comment
5 – Principal Investment Strategies
The Staff notes the
disclosure states, “The Fund defines “small cap” equity securities as those securities with market capitalizations that
at the time of investment are within the market capitalization range of the companies comprising the Russell 2000 Index or the S&P
SmallCap 600 Index.”
(a) Please revise the disclosure to state what the current market capitalization ranges are for the Russell
2000 Index and the S&P SmallCap 600 Index (as of a most recently practicable date).
(b) Please explain why there are two indices referenced in the above disclosure and how that will work in
practice. For example, will the range of market capitalizations be the widest range between the two indices? Please clarify in the disclosure
how this will work.
Response
to Comment 5
Pursuant to the Staff’s
comment, the disclosure has been revised to include the current market capitalization ranges for the Russell 2000 Index and the S&P
SmallCap 600 Index as of a most recently practicable date.
As it relates to the
use of two indices for determining the range of market capitalizations, both such indices are widely recognized unaffiliated third-party
small capitalization indices. For determining the market capitalizations comprising the “small capitalization” market of securities,
the Fund will reference the capitalization ranges of the securities comprising these two indices. If either index classifies a security
with a particular market capitalization as being a “small capitalization” security as of the date the test is being conducted,
the Fund believes it is reasonable to classify such security, or a different security with such a market capitalization, as being a “small
capitalization” security.
Comment
6 – Principal Investment Strategies
The
Staff notes the disclosure states, “The Fund will employ a buy-write option strategy pursuant to which it will invest directly
in small cap equity securities and write (sell) U.S. exchange-traded call options on the Russell 2000 Index or the Underlying ETFs in
order to seek additional cash flow in the form of premiums on the options that may be distributed to shareholders on a monthly basis.”
If accurate, please add “covered” before “exchange-traded” call options.
Response
to Comment 6
As noted above in
the Registrant’s Response to Comment 3, not all of the options that the Fund will write (sell) will be covered. Therefore, the Registrant
respectfully declines to add a reference to “covered”.
Comment
7 – Principal Investment Strategies
The Staff notes the
disclosure states, “The equity securities in which the Fund will invest and the options which the Fund will write will be limited
to U.S. exchange-traded securities and options.” Please clarify whether this means U.S. exchange-traded options or options on U.S.
exchange-traded securities.
Response
to Comment 7
The disclosure has
been revised to clarify that the options will be U.S. exchange-traded options.
Comment
8 – Principal Investment Strategies
The Staff notes the
disclosure states, “The equity securities held by the Fund may include non-U.S. securities that are either directly listed on a
U.S. securities exchange or in the form of depositary receipts.” Please specify, if true, that these are American depositary receipts.
Response
to Comment 8
The disclosure
has been revised in accordance with the Staff’s comment.
Comment
9 – Principal Investment Strategies
The Staff notes the
disclosures states, “The option portion of the portfolio will generally consist of U.S. exchange-traded calls on the Russell 2000
Index or the Underlying ETFs that are written by the Fund.” Please change “generally” to “primarily”.
Response
to Comment 9
In accordance with
the Staff’s comment, the reference has been changed to “primarily.”
Comment
10 – Principal Investment Strategies
The Staff notes that
certain parts of the disclosure in Item 4 are repetitive. Consider streamlining the disclosure for clarity.
Response
to Comment 10
The disclosure has
been revised in accordance with the Staff’s comment.
Comment
11 – Principal Investment Strategies
The Staff notes the
disclosures states, “The call options written by the Fund will generally have a short notional value of 50-100% of the Fund’s
assets, excluding the notional value of any offsetting long call positions”. However, earlier disclosure states, “The Fund
does not target a specific income level, but seeks to provide investors with current income primarily from options premiums through
writing calls with a short notional value of 50-100% of the Fund’s assets excluding the notional value of any offsetting long call
positions.” Please revise the disclosure for consistency to use “primarily” throughout.
Response
to Comment 11
The Registrant notes
that the two referenced sentences are referring to different concepts. The Fund seeks to provide investors with current income primarily
from the premiums received on the call options that the Fund will write, but income may also be generated from the Fund’s other
investments. However, the call options written by the Fund (to receive the premium) will generally have a short notional value of 50-100%
of the Fund’s assets. The Registrant does not believe these two statements to be inconsistent with each other and respectfully declines
to revise the disclosure as it believes the current disclosure is adequate for investor comprehension.
Comment
12 – Principal Investment Strategies
The Staff notes the
disclosure states, “In addition to selling call options on the Russell 2000 Index or Underlying ETFs, the Fund may both sell a call
and buy an offsetting call with a higher strike price on the Russell 2000 Index or Underlying ETFs in order to retain some upside performance
in certain market conditions.” If accurate, please state that these offsetting call options are not a part of the main buy-write
strategy.
Response
to Comment 12
The Registrant notes
that the offsetting call options are not intended to be a part of the Fund’s strategy relating to the provision of current income,
but rather will be used in seeking to achieve the Fund’s secondary investment objective of providing capital appreciation. The disclosure
has been revised accordingly.
Comment
13 – Principal Investment Strategies
The
Staff notes the disclosure states, “The Fund may also hold shares of the Underlying ETFs directly from time to time.”
To the extent the shares held by the Fund are small cap securities, please clarify that they will count towards the Fund’s 80% names
rule policy.
Response
to Comment 13
The Registrant confirms
that to the extent the Fund invests directly in shares of Underlying ETFs, such investments will count towards the Funds 80% investment
policy. The referenced disclosure has been revised to make this clear.
Comment
14 – Principal Risks
The Staff has the
following comments with respect to the “Call Options Risk”:
(a) Please considering revising the risk to be tailored to covered call options.
(b) The Staff notes that the risk factor includes
language regarding “uncovered” call options, if uncovered call options are a part of the Fund’s principal investment
strategy, please add disclosure stating this in the applicable section.
(c) If the Fund is utilizing uncovered call options,
please disclose in the principal investment strategy if the Fund will use leverage as part of its principal investment strategy.
Response
to Comment 14
Given that the Fund
will write (sell) uncovered options, the Registrant believes the current risk disclosure is accurate and adequate for investor comprehension
and thus respectfully declines to make any revisions. The Registrant further confirms that language has been added to the Principal Investment
Strategies section disclosing that the Fund will utilize uncovered call options.
With respect to clause
(c), the Registrant confirms the intent is not for the Fund to use leverage and therefore no changes to the disclosure have been made.
Comment
15 – Principal Risks
With respect to the
Depositary Receipts Risk, please revise the disclosure to specify if referring to American Depositary Receipts.
Response
to Comment 15
The Registrant has
revised the disclosure set forth in the section entitled “Principal Investment Strategies” to indicate that it may invest
in American Depositary Receipts but respectfully declines to revise “Depositary Receipts Risk” as it has determined that such
disclosure in its current form is accurate and compliant with the requirements of Form N-1A.
Comment
16 – Principal Risks
Please consider revising
the “Non-U.S. Securities Risk” to more closely align with the strategy of the Fund.
Response
to Comment 16
The Fund has thoughtfully
considered the Staff’s comment and determined that the risk disclosure in its current form is accurate and compliant with the requirements
of Form N-1A and thus respectfully declines to revise the referenced disclosure.
Comment
17 – Principal Risks
Please revise the
“Significant Exposure Risk” to be consistent with the disclosure contained in Item 4. For example, the risk states “to
the extent that the Fund invests a significant percentage of its assets in a single asset class or the securities of issuers within the
same country, state, region, industry or sector, an adverse economic, business or political development may affect the value of the Fund’s
investments more than if the Fund were more broadly diversified,” while the Item 4 disclosure states that “to the extent the
Fund invests a significant portion of its assets in a given jurisdiction or investment sector, the Fund may be exposed to the risks associated
with that jurisdiction or investment sector.”
Response
to Comment 17
The Fund has thoughtfully
considered the Staff’s comment and determined that the risk disclosure in its current form is accurate and compliant with the requirements
of Form N-1A and thus respectfully declines to revise the referenced disclosure.
Comment
18 – Principal Risks
Please consider revising
the “Valuation Risk” to more closely align with the strategy of the Fund.
Response
to Comment 18
The Registrant has
thoughtfully considered the Staff’s comment and determined that the risk disclosure in its current form is accurate and compliant
with the requirements of Form N-1A and thus respectfully declines to revise the referenced disclosure.
Comment
19 – General
Please supplementally
disclose wh