Correspondence 0001213900-24-003257 from Amplify ETF Trust (CIK 0001633061)
Amplify ETF Trust (CIK 0001633061)
Date: Jan. 12, 2024 · CIK: 0001633061 · Accession: 0001213900-24-003257
AI Filing Summary & Sentiment
File numbers found in text: 333-207937, 811-23108
Show Raw Text
CORRESP
1
filename1.htm
[Chapman
and Cutler LLP Letterhead]
January 12, 2024
VIA EDGAR CORRESPONDENCE
Lisa Larkin
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
Amplify ETF Trust
File Nos. 333-207937; 811-23108
Dear Ms. Larkin:
This letter responds to your
comments provided by telephone regarding the registration statement filed on Form N-1A for Amplify ETF Trust (the “Trust”)
with the Staff of the Securities and Exchange Commission (the “Staff”) on July 26, 2023 (the “Registration
Statement”). The Registration Statement relates to the Amplify Video Game Tech 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 notes that this
is an automatically effective filing pursuant to Rule 485(b) of Securities Act of 1933, and as such, a Staff accountant is not required
to review the Registration Statement. If the Registrant intends to request acceleration of the filing, please ensure a Staff accountant
reviews the Registration Statement.
Response to Comment 1
The Registrant acknowledges
the Staff’s comment relating to the requirement of a Staff accountant’s review of a Registration Statement filed pursuant
to an acceleration request.
Comment 2 – Investment Objective.
The Staff notes that the
investment objective states, “The Amplify Video Game Tech ETF seeks investment results that generally correspond (before fees and
expenses) to the total return performance of the EEFund Video Game Tech™ Index (the “Index”).” Please change
“correspond” to “correlate” as the Staff believes “correlate” is a more accurate term.
Response to Comment 2
The disclosure has been revised
in accordance with the Staff’s comment.
Comment 3 – Principal Investment Strategies
Pursuant to Rule 35d-1 of
the 1940 Act, please provide a 50% assets or revenue test to tie the name of the Fund to the way video game technology is defined. The
Staff does not believe the name of the Fund is currently appropriately tied to video game technology as currently described in the Registration
Statement.
Response to Comment 3
In accordance with the Staff’s
comment, the disclosure has been revised as follows:
“The Fund will invest
at least 80% of its net assets (plus borrowings for investment purposes) in exchange-listed companies that are primarily engaged in a
business activity supporting or utilizing the video gaming industry. The Fund uses a “passive” or indexing approach to try
to achieve the Fund’s investment objective. The Fund will invest at least 80% of its net assets (plus borrowing for investment purposes)
in the component securities of the EEFund Video Game Tech™ Index. Unlike many investment companies, the Fund does not try to “beat”
the Index and does not seek temporary defensive positions when markets decline or appear overvalued.
The Index is comprised of
companies that are primarily engaged in a business activity supporting or utilizing the video gaming industry (“Video Gaming Companies”).
Specifically, the Video Gaming Companies that comprise the Index include the following:
· Primary Participants: Companies that are software developers or hardware providers for primarily
the video game, education, virtual/augmented reality, or simulation markets, or companies whose business model primarily relies on delivering
goods and services to or from segments of the video gaming industry.
· Secondary Participants: Companies that maintain a partial business activity in video game related
software or hardware, educational software, virtual / augmented reality technology, simulation technology or provide distribution or intellectual
properties (such as names, images and artistic works used in the video gaming industry) to the aforementioned. Secondary Participants
also includes companies whose business model partially relies on delivering goods and services to or from segments of the video gaming
industry.
· Diversified Participants: Large broad-based companies whose business framework supports the video
game, educational software, or virtual reality/simulation segments of the video gaming industry (e.g., Sony Interactive Entertainment,
Activision Blizzard and Nintendo) (“gaming conglomerate” companies).
- 2 -
· Small Capitalization Companies: These are companies with market capitalizations less than $1 billion.
Weightings. All
components are weighted as follows: Primary Participants – 70%, Secondary Participants - 10%, Diversified Participants – 10%,
Small Capitalization Companies - 10%. The Index constituents are equally weighted within each category.
The Fund respectfully notes
that the 50% assets/revenue test is not specifically required under Rule 35d-1(a)(2). Rule 35d-1(a)(2) states that a materially deceptive
and misleading name of a fund includes “a name suggesting that the Fund focuses its investments in a particular type of investment
or investments, …, unless: the Fund has adopted a policy to invest, under normal circumstances, at least 80% of the value of its
Assets in the particular type of investments, or in investments in the particular industry or industries, suggested by the Fund's name,”
and the fund has adopted a policy to provide at least 60 days’ notice to shareholders of any change to the policy. The Fund has
adopted an 80% policy to invest at least 80% of its assets in components on the Index, which are comprised of Video Gaming Companies.
The Fund believes that the Index categories detailed above, including its weightings, denote an adequate economic tie to video gaming
technology. Therefore, the Fund believes its name satisfies the requirements of Rule 35d-1(a)(2).
Comment 4 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“Companies that are not pure-play companies
but provide intellectual property in support of the video game, educational software, or virtual reality/simulation segments (“non-pure-play”
companies.”
Please be more specific to
what is meant by “intellectual property”.
Response to Comment 4
Please refer to the Fund’s
response to Comment No. 3 for the revised disclosure.
Comment 5 – Principal Investment Strategies
The Staff notes the following
two bullet points set forth in the section entitled “Principal Investment Strategies”:
• “Companies that are not pure-play companies but provide intellectual property in support of the
video game, educational software, or virtual reality/simulation segments (“non-pure-play” companies).
- 3 -
• Large broad-based companies whose business model supports the video game, educational software, or virtual
reality/simulation segments (“gaming conglomerate” companies).”
Please add “of the video
gaming industry” after segments for both of the above-reference bullet points.
Response to Comment 5
Please refer to the Fund’s
response to Comment No. 3 for the revised disclosure.
Comment 6 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“Large broad-based companies whose business
model supports the video game, educational software, or virtual reality/simulation segments of the video gaming industry (“gaming
conglomerate” companies).”
Please clarify what is meant
by “whose business model supports”.
Response to Comment 6
Please refer to the Fund’s
response to Comment No. 3 for the revised disclosure.
Comment 7 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“The initial universe of Video Gaming
Companies is determined based on proprietary research and analysis conducted by EE Funds LLC (the “Video Gaming Index
Provider”). The Video Gaming Index Provider uses a variety of publicly available resources for such analysis, including financial
statements and other reports published by issuers to determine whether a company is actively engaged as a Video Gaming Company and its
status as a pure-play, non-pure-play, or gaming conglomerate company (each, a “sector”).”
The Staff requests that the
disclosure be revised to use a different term than “sector.”
- 4 -
Response to Comment 7
In accordance with the Staff’s
comment, the disclosure has been revised as follows:
The initial universe of Video Gaming Companies
is determined based on proprietary research and analysis conducted by EE Funds LLC (the “Video Gaming Index Provider”).
The Video Gaming Index Provider uses a variety of publicly available resources for such analysis, including financial statements and other
reports published by issuers to determine whether a company is actively engaged as a Video Gaming Company and its status as a Primary
Participants Diversified Participant, Secondary Participant, or Small Capitalization Company (each, a “category”).
Comment 8 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“Video Gaming
Companies are then screened for investibility…”
Please change “investbility”
to “investability”.
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 following
statement set forth in the section entitled “Principal Investment Strategies”:
“a minimum market capitalization of $300
million, an operating company structure (as opposed to a pass-through security)….
Please explain the relevance
of the parenthetical or consider deleting if not necessary.
Response to Comment 9
In accordance with the Staff’s comment, the
parenthetical has been removed from the disclosure.
- 5 -
Comment 10 – Principal Investment Strategies
Please
add disclosure to the “Principal Investment Strategies” section regarding the Index Weighting Methodology.
Response to Comment 10
Please refer to the Fund’s
response to Comment No. 3 for the revised disclosure.
Comment 11 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“The Fund invests at least 80% of its
total assets, exclusive of collateral held from securities lending, in securities, ADRs, or GDRs of Video Gaming Companies.
Please confirm the 80% Policy
should not include “under normal circumstances”.
Response to Comment 11
In accordance with the Staff’s
comment, the disclosure has been revised as follows:
“Under normal circumstances, the Fund
invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities that comprise the Index,”
Comment 12 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
“The Fund invests at least 80% of its
total assets, exclusive of collateral held from securities lending, in securities, ADRs, or GDRs of Video Gaming Companies.”
Please confirm that “total
assets” is equivalent to net assets plus borrowings for investment purposes under Rule 35d-1.
Response to Comment 12
The Fund confirms “total
assets” is equivalent to net assets plus borrowings for investment purposes. However, the disclosure has been revised to state that
the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities that comprise the Index.
See the Fund’s response to Comment No. 11 for the revised disclosure.
- 6 -
Comment 13 – Principal Investment Strategies
Please
specify what securities are included in the 20% bucket. If the Fund intends to invest in derivatives as part of the 20% bucket, please
ensure enough specificity in the risk disclosure with respect to derivatives.
Response to Comment 13
The Fund points the Staff
to the section entitled “Additional Information about the Fund’s Strategies and Risks – Principal Investment Strategies,”
which includes the following disclosure: “The Fund may invest up to 20% of its total assets in equity securities that are not in
the Fund’s Index to the extent that the Adviser believes such investments should help the Fund’s overall portfolio to provide
returns substantially similar to the Index.” However, the Fund supplementally confirms that it does not intend use the 20% bucket
to invest in derivatives.
Comment
14 – Principal Investment Strategies
The Staff notes the following
statement set forth in the section entitled “Principal Investment Strategies”:
Concentration Policy. The Fund will not
concentrate its investments (i.e., invest more than 25% of the value of its total assets) in securities of issuers in any industry or
group of industries, except to the extent the Index is concentrated in an industry or a group of industries.
Please disclose whether the
Index is currently concentrated and if so, disclose the specific industry or group of industries in which the Index is concentrated.
Response to Comment 14
In accordance with the Staff’s
comment, the Fund has revised the disclosure as follows:
“The
Fund will not concentrate its investments (i.e., invest more than 25% of the value of its total assets) in securities of issuers
in any one industry or group of industries, except to the extent that the Index concentrates in an industry or group of industries. As
of the date of this prospectus, the Index is concentrated in the [______] industries.”
Comment 15 – Principal Risks
The Staff notes that the principal
risks appear in alphabetical order. The Staff requests the Fund list its principal
risks in the order of importance rather than alphabetically. See ADI 2019-08 – Improving Principal Risk Disclosure.
- 7 -
Response to Comment 15
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. The Fund continues
to evaluate its approach to the ordering of risk factors in light of recent Securities and Exchange Commission guidance.
Comment 16– Principal Risks
The Staff notes that there
is a “Concentration Risk” set forth in the section entitled “Principal Risks” but there is not a “Video
Gaming Industry Risk.” Please consider adding an industry specific risk.
Response
to Comment 16
The Fund respectfully declines
to add a “Video Gaming Industry Risk” and points the Staff to the “Video Gaming Companies Risk” and “Concentration
Risk.” The Fund believes the risks, as currently presented, are accurate for investor comprehension given the strategy of the Fund.
Comment 17 – Principal Risks
The Staff notes “ETF
Risks” set forth in the section entitled “Principal Risks.” Please supplementally confirm if the Fund invests in instruments
traded outside of a collateralized settlement system.
Response
to Comment 17
The Registrant confirms that
none of the instruments in which the Fund intends to invest in are traded outside of a collateralized settlement system.
- 8 -
Comment 18 – Principal Risks
Please confirm whether an
“Index Provider Risk” should be included in the Principal Risks.
Response
to Comment 18
In accordance with the Staff’s
comment, the following disclosure has been added to the Fund’s prospectus:
Index
Provider Risk. The Fund seeks to achieve returns that generally correlate, before fees and expenses, to the performance of the Index,
as published by their Index Provider. There is no assurance that the Index Provider will compile the Index accurately, or that the Index
will be determined, composed or calculated accurately. The composition of the Index is heavily dependent on information and data supplied
by third parties over which the Advis