Correspondence 0001445546-25-002289 from FIRST TRUST EXCHANGE-TRADED FUND VI (CIK 0001552740)
FIRST TRUST EXCHANGE-TRADED FUND VI (CIK 0001552740)
Date: March 24, 2025 · CIK: 0001552740 · Accession: 0001445546-25-002289
AI Filing Summary & Sentiment
File numbers found in text: 333-182308, 811-22717
Show Raw Text
CORRESP
1
filename1.htm
Chapman and Cutler LLP
320 South Canal Street, 27th Floor
Chicago, Illinois 60606
T 312.845.3000
F 312.701.2361
www.chapman.com
March 24, 2025
VIA EDGAR
CORRESPONDENCE
Yoon Choo
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. Choo:
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 January 10,
2025 (the “Registration Statement”). The Registration Statement relates to the First Trust Balanced 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 Statement. 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 Statement. Once
the correspondence is filed, please provide notice by email and include a redline showing any changes.
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
Statement 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 Statement to
the Staff once filed.
Comment
2 – General
When filing this correspondence
on EDGAR, please include as an exhibit a copy of the blackline that reflects changes from the 485A filing of the Registration Statement.
Response
to Comment 2
The Registrant confirms it will provide a copy of the blackline showing changes made to the Registration Statement in response to Staff comments.
Comment
3 – General
The Staff notes that
information on the Index is not publicly available. Please supplementally confirm that information regarding the Index, including the
methodology, will be publicly available at the time shares of the Fund are offered.
Response
to Comment 3
The Registrant confirms
that information regarding the Index, including the methodology, will be publicly available at the time shares of the Fund are offered.
Comment
4 – Fees and Expenses of the Fund
Please supplementally
provide a completed fee table and expense examples for the Fund.
Response
to Comment 4
A completed fee table
and expense examples for the Fund has been attached hereto as Exhibit A.
Comment
5 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
The Fund, using an
indexing investment approach, attempts to replicate, before fees and expenses, the performance of the Index.
As stated in the Item
9 disclosure, please disclose here that the Fund will use full replication to seek to track the Index.
2
Response
to Comment 5
Pursuant to the Staff’s
comment, the following disclosure has been added to the first paragraph of the section entitled “Principal Investment Strategies”:
The Fund will generally employ a full
replication strategy, meaning that it will normally invest in all of the securities comprising the Index in proportion to their weightings
in the Index.
Comment
6 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
The ETFs comprising
the Index selection universe are advised by First Trust Advisors L.P. (“First Trust”), the Fund’s investment
advisor.
Please revise to clarify
that the Index is comprised of ETFs advised by First Trust and that the Fund operates as a fund of funds.
Please also disclose
the number of Index constituents. If disclosure of a specific number is not feasible, please disclose a range.
Response
to Comment 6
Pursuant to the Staff’s
comment, the disclosure has been revised as follows:
The Fund operates
as a fund-of-funds. The ETFs comprising the Index selection universe are advised by First Trust Advisors L.P. (“First
Trust”), the Fund’s investment advisor. It is expected that the Index will generally have between 15 – 50
constituents. (emphasis added)
Comment
7 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
The Index is developed,
owned, maintained and calculated by Bloomberg Index Services Limited (“BISL” or the “Index Provider”).
The referenced disclosure
states that the Index was developed by BISL. Please disclose what role, if any, the Advisor or its affiliates played in Index creation,
constitution and methodology development and whether the Advisor or its affiliates retained any role with respect to the Index given that
the Index constituents are all First Trust advised funds.
3
Response
to Comment 7
The Registrant notes
that the Index Provider consulted with First Trust regarding the origination of the Index and the Index methodology. While the Index Provider
may consult with First Trust prior to effectuating a material change to the Index methodology, First Trust maintains no discretion with
regard to the compilation and composition of the Index or any changes thereto as such discretion ultimately lies with the Index Provider.
Comment
8 – Principal Investment Strategies
The
Staff notes references to “According to the Index Provider” throughout the Principal Investment Strategies section.
The Staff continues to believe that it is not appropriate to qualify the disclosure in this manner. Please delete the qualifications.
Response
to Comment 8
The Registrant has
thoughtfully considered the Staff’s comment and determined that the disclosures in their current form are accurate and compliant
with the requirements of Form N-1A. Thus, the Registrant respectfully declines to revise the referenced disclosures.
Comment
9 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
According to the Index
Provider, the Index seeks to track a portfolio with fixed allocations to income-generating ETFs across three asset classes: target income
and buywrite income equity ETFs (“Equity Linked Income ETFs”), actively managed investment grade fixed income ETFs
(“Fixed Income ETFs”) and target income commodities ETFs (“Commodity Linked Income ETFs”) (each,
an “Underlying ETF” and collectively, the “Underlying ETFs”).
Please disclose how
the starting universe of investable Underlying ETFs was determined by the Index Provider. Please revise the disclosure to include additional
descriptions regarding the rules-based methodology used in the operation of the Index.
Response
to Comment 9
The Index Provider
consulted with First Trust regarding the Index methodology, including the starting universe. The disclosure set forth in the section entitled
“Principal Investment Strategies” describes the operation of the Index.
4
Comment
10 – Principal Investment Strategies
If accurate, please
disclose that the Equity Linked ETFs are expected to experience limited capital appreciation relative to their respective indices but
are subject to the risk of loss on their equity holdings. Please also supplementally confirm that the Underlying ETFs do not have stated
downside features (e.g., a buffer or floor).
Response
to Comment 10
Pursuant to the Staff’s
comment, the following disclosure has been added to the section entitled “Principal Investment Strategies – Equity Allocation”:
The Equity Linked
ETFs may experience more limited capital appreciation relative to their respective indices but are subject to the risk of loss on their
equity holdings.
The Registrant confirms
that the Underlying ETFs currently included in the Index do not have stated downside features; however, the Index Provider may in the
future add target income funds to the Equity Linked Income ETFs sleeve.
Comment
11 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
For instance, an Underlying
ETF utilizing a target income strategy may seek to make distributions at an annual rate that is approximately 8% (before fees and expenses)
over the current annual dividend yield of the Nasdaq-100 Index.
The commodity allocation
category describes income level without reference to specific numeric targets. As the target rate will differ among the Underlying ETFs,
please consider whether the numeric reference should be omitted.
Response
to Comment 11
Pursuant to the Staff’s
comment, the referenced disclosure has been revised as follows:
For instance, an Underlying
ETF utilizing a target income strategy may seek to make distributions at an annual rate that is approximately 8% (before fees
and expenses) over the current annual dividend yield of the Nasdaq-100 Index. (emphasis added)
5
Comment
12 – Principal Investment Strategies
The Staff notes the
following disclosure set forth in the section entitled “Principal Investment Strategies”:
The Index allocates
14% of the Fixed Income Allocation to Underlying ETFs categorized as “core,” 8.75% to Underlying ETFs categorized as “investment
grade” and 12.25% to Underlying ETFs categorized as “government.”
The percentages seem
to relate to the total index allocations and not to fixed income allocations. If so, please revise to reflect the percentage of the fixed
income allocation.
Response
to Comment 12
The Registrant has
thoughtfully considered the Staff’s comment and confirms that the disclosure is accurate and thus respectfully declines to revise
the referenced disclosure.
Comment
13 – Principal Risks
The Staff notes “Distribution
Tax Risk” set forth in the section entitled “Principal Risks.” Please add disclosure on how the Fund’s tax risk
may adversely affect investors in the Fund.
Please also consider
whether an Underlying ETF’s effort to engage in transactions to change the tax character of certain distributions from return of
capital to taxable dividends is a material risk for the Fund. In this regard, please see “Tax Characterization Risk” in the
Principal Risks section of the registration statement for FT Vest Rising Dividend Achievers Target Income ETF.
Response
to Comment 13
The Registrant has
thoughtfully considered the Staff’s comment and determined that the disclosure set forth in “Distribution Tax Risk”
and “Tax Risks Associated with Investment in Options on Indexes” in the section entitled “Principal Risks” is
compliant with the requirements of Form N-1A as it accurately describes the principal risks to Fund shareholders as it relates to tax
considerations.
Comment
14 – Principal Risks
The Staff notes the
following disclosure in “Equity Securities Risk” set forth in the section entitled “Principal Risks”:
The value of the Fund’s
shares will fluctuate with changes in the value of the equity securities in which it invests.
Please consider whether
this risk factor should be revised in light of limits on capital appreciation on the Equity Linked ETFs.
6
Response
to Comment 14
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
15 – Principal Risks
The Staff notes “Non-Correlation
Risk” set forth in the section entitled “Principal Risks.” The Staff notes that “Non-Correlation Risk” may
be confusing in light of the risk factor “Portfolio Correlation Risk,” which covers an unrelated risk.
Response
to Comment 15
The Registrant has
thoughtfully considered the Staff’s comment and determined that the risk disclosures in their current form are accurate and compliant
with the requirements of Form N-1A and thus respectfully declines to revise the referenced disclosures.
Comment
16 – Principal Risks
The Staff notes the
following disclosure in “Non-Correlation Risk” set forth in the section entitled “Principal Risks”:
Additionally, in order
to comply with its investment strategies and policies, the Fund portfolio may deviate from the composition of the Index.
Please consider the
accuracy of this disclosure. While the Fund is permitted to deviate from its principal investment strategy, there appears to be no disclosure
in the prospectus that would require deviation in order to comply with its investment strategy.
Response
to Comment 16
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
17 – Principal Risks
The Staff notes “Portfolio
Turnover Risk” set forth in the section entitled “Principal Risks.” The Index is reconstituted and rebalanced semi-annually
and the Fund makes corresponding changes shortly thereafter. Please supplementally explain why this is a principal risk of the Fund. If
it is a principal risk, please add frequent trading disclosure to the investment strategy discussion.
7
Response
to Comment 17
Pursuant to the Staff’s
comment, “Portfolio Turnover Risk” has been deleted.
Comment
18 – Performance
Please supplementally
disclose the broad-based index the Fund intends to use.
Response
to Comment 18
The Fund intends to
use the S&P 500 Index and the Bloomberg U.S. Aggregate Bond Index as its broad-based securities market indexes.
Comment
19 – Additional Information on the Fund’s Investment Objective and Strategies
The Staff notes the
following disclosure set forth in the section entitled “Additional Information on the Fund’s Investment Objective and Strategies”:
However, under various
circumstances, full replication of the Index may not be possible or practicable. In those circumstances, the Fund may purchase a sample
of securities in the Index.
The Fund invests in
a limited number of affiliated ETFs. Please disclose the circumstances that may prompt the Fund to use representative sampling strategies
or other techniques to track the Index.
Response
to Comment 19
As is stated in the
first paragraph of the section entitled “Principal Investment Strategies,” the Fund intends to fully replicate the Index.
The referenced disclosure is included in Item 9 merely to reserve the right to deviate from that in the future in the event unforeseen
circumstances arise. The inclusion of such disclosure is permissible and widespread.
Comment
20 – Management of the Fund
The Staff notes the
section entitled “Management of the Fund – Management Fee.” Does the Fund’s unitary management fee include index
provider licensing or other fees? If so, please disclose. If the Fund separately pays index fees for licensing or otherwise, please also
disclose.
Response
to Comment 20
The Registrant supplementally
confirms that the unitary management fee includes the index license fee.
8
Comment
21 – Federal Tax Matters
The Staff notes the
sections entitled “Federal Tax Matters – Non-U.S. Tax Credit” and “Federal Tax Matters – Investments in
Certain Non-U.S. Corporations.” Please consider whet