Correspondence 0001387131-23-012549 from Virtus ETF Trust II (CIK 0001648403)
Virtus ETF Trust II (CIK 0001648403)
Date: Oct. 23, 2023 · CIK: 0001648403 · Accession: 0001387131-23-012549
AI Filing Summary & Sentiment
File numbers found in text: 333-206600, 811-23078
Letter
Via EDGAR Transmission Division of Investment Management F Street, N.E. Washington, D.C. 20549 Re: Virtus ETF Trust II (the “Trust”) File Nos. 333-206600 and 811-23078
Dear Ms. Browning:
On September 26, 2023, you provided initial comments to Post-Effective Amendment No. 82, Amendment No. 84, to the Trust’s Registration Statement (the “Amendment”), which was filed pursuant to Rule 485(a)(2) under the Securities Act of 1933 (the “Securities Act”) on August 11, 2023, to register shares of the Virtus Newfleet Short Duration Core Plus Bond ETF series of the Trust (the “Fund”). On October 18, 2023, we filed correspondence responding to those comments (the “Initial Response Letter”). On October 20, 2023, you provided some additional comments in response to the Initial Response Letter and, therefore, I am writing to respond to those additional comments. I have reproduced your comments below, followed by our responses. Terms used in this letter that are not otherwise defined have the meanings assigned to them in the Initial Response Letter.
1. We remind you that the Trust and its management are responsible for the accuracy and adequacy of the disclosures notwithstanding any review, comment to action or absence of action by the staff.
RESPONSE: The Trust acknowledges the staff’s comment.
2. With respect to Comment 1 to the Initial Response Letter, please acknowledge that our comment was that responses to staff comments should be filed on EDGAR at least five business days in advance of the Amendment’s effective date.
RESPONSE: The Trust acknowledges the staff’s comment and notes that the Initial Response Letter was filed in accordance with such request.
Philadelphia, PA ● Malvern, PA ● Cherry Hill, NJ ● Newark, NJ ● Wilmington, DE ● Washington, DC ● New York, NY ● Chicago, IL
A Pennsylvania Limited Liability Partnership
3. In response to Comment 5 to the Initial Response Letter, you stated that the Fund’s investment objective was revised to remove the reference to “a competitive level of.” Please confirm that such reference was also removed from the strategy disclosure.
RESPONSE: The Trust confirms that the referenced disclosure was removed and is no longer present in the prospectus or SAI.
4. In response to Comment 7 to the Initial Response Letter, you added disclosure indicating that “more liquid” means “highly traded.” Please revise that disclosure to clarify which entity (e.g., Newfleet) is making the determination on “highly traded.”
RESPONSE: The Trust will revise the disclosure to state, “(i.e., considered by Newfleet to be highly traded).”
5. We don’t believe that the disclosure included in the response to Comment 7 to the Initial Response Letter rises to the level of specificity that we were looking for with respect to disclosure of attendant credit qualities. Therefore, please clarify with respect to the Fund’s 80% basket the applicable credit quality ratings.
RESPONSE: The Trust believes the revised disclosure, as reflected in response to Comment 7 to the Initial Response Letter, appropriately reflects the attendant credit qualities of the securities to be included in the 80% basket and, therefore, respectfully declines to make any additional changes.
6. Response to Comment 7 to the Initial Response Letter describes the fixed income sectors in which the Fund will principally invest but does not disclose all fixed income sectors. Because you don’t disclose all fixed income sectors in the “Principal Investment Strategy” section, please supplementally confirm to the staff that you are aware that if the Fund’s fixed income sector rotation changes, such that new fixed income sectors become principal investments, you will update the corresponding bullet points in the “Principal Investment Strategy” section.
RESPONSE: The Trust acknowledges the staff’s comment and confirms that changes to the fixed income sectors in which the Fund principally invests will be disclosed to shareholders.
7. The penultimate bullet point included in the response to Comment 7 to the Initial Response Letter includes a reference to Rule 144A. We ask that you add some additional disclosure explaining Rule 144A in plain English or add a cross reference to where that Rule is explained in the Fund prospectus or SAI.
RESPONSE: In the Item 9 section, the Trust will add a cross reference to “Rule 144A Securities Risk” in the “Additional Information Regarding the Fund’s Principal Risks” section.
8. The staff reiterates the comment given as Comment 26 to the Initial Response Letter to revise “MBS and ABS Risks” to be more attendant to the specific ABS and MBS in which the Fund may invest.
RESPONSE: As stated in the Initial Response Letter, the Trust has reviewed the referenced risk disclosure and does not believe any additional revisions are necessary.
9. The staff reiterates the comment given as Comment 28 to the Initial Response Letter to revise “Sector Focus Risk” to be more specific to the sectors in which the Fund will invest.
RESPONSE: As stated in the Initial Response Letter, the Trust has reviewed the referenced risk disclosure and does not believe any additional revisions are necessary.
10. In response to Comment 32, you indicated that the Item 9 disclosure pertaining to ETFs will be removed. Please confirm that you will also remove the Item 9 disclosure pertaining to investments in other registered investment companies.
RESPONSE: The Trust confirms that the Item 9 disclosure pertaining to investments in both ETFs and other registered investment companies will be removed.
11. The staff reiterates the comment given as Comment 38 to the Initial Response Letter, as it is the staff’s view that the 1991 Letter continues to be applicable.
RESPONSE: The Trust respectfully declines to add the requested language for the reasons described in the Initial Response Letter, primarily that the 1998 Amendments did not incorporate into Form N-1A the interpretation from the 1991 Letter on foreign governments being subject to a fund’s concentration policy.
12. The response to Comment 41 to the Initial Response Letter includes disclosure stating, “The derivative action provisions summarized above will not apply to claims brought under the federal securities laws to the extent that any such federal laws, rules or regulations do not permit such application.” Please delete “to the extent that any such federal laws, rules or regulations do not permit such application.”
RESPONSE: The Trust will make the requested change.
* * *
Please direct any questions or additional comments to me at the above-referenced telephone number or, in my absence, to Michael D. Mabry at (215) 564-8011.
Very
truly yours,
/s/
Joel D. Corriero
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CORRESP
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filename1.htm
Stradley Ronon Stevens & Young,
LLP
2005
Market Street
Suite
2600
Philadelphia,
PA 19103
Telephone
215.564.8000
Fax
215.564.8120
www.stradley.com
Joel
D Corriero
Partner
jcorriero@stradley.com
215.564.8528
October
23, 2023
Via
EDGAR Transmission
Ms.
Kim Browning
Division
of Investment Management
U.S.
Securities and Exchange Commission
100
F Street, N.E.
Washington,
D.C. 20549
Re: Virtus
ETF Trust II (the “Trust”)
File
Nos. 333-206600 and 811-23078
Dear
Ms. Browning:
On
September 26, 2023, you provided initial comments to Post-Effective Amendment No. 82, Amendment No. 84, to the Trust’s Registration
Statement (the “Amendment”), which was filed pursuant to Rule 485(a)(2) under the Securities Act of 1933 (the “Securities
Act”) on August 11, 2023, to register shares of the Virtus Newfleet Short Duration Core Plus Bond ETF series of the Trust (the
“Fund”). On October 18, 2023, we filed correspondence responding to those comments (the “Initial Response
Letter”). On October 20, 2023, you provided some additional comments in response to the Initial Response Letter and, therefore,
I am writing to respond to those additional comments. I have reproduced your comments below, followed by our responses. Terms used in
this letter that are not otherwise defined have the meanings assigned to them in the Initial Response Letter.
1. We
remind you that the Trust and its management are responsible for the accuracy and adequacy
of the disclosures notwithstanding any review, comment to action or absence of action by
the staff.
RESPONSE: The
Trust acknowledges the staff’s comment.
2. With
respect to Comment 1 to the Initial Response Letter, please acknowledge that our comment
was that responses to staff comments should be filed on EDGAR at least five business days
in advance of the Amendment’s effective date.
RESPONSE: The
Trust acknowledges the staff’s comment and notes that the Initial Response Letter was filed in accordance with such request.
Philadelphia, PA ● Malvern, PA ● Cherry
Hill, NJ ● Newark, NJ ● Wilmington, DE ● Washington, DC ● New York, NY ● Chicago, IL
A Pennsylvania Limited Liability Partnership
3. In
response to Comment 5 to the Initial Response Letter, you stated that the Fund’s investment
objective was revised to remove the reference to “a competitive level of.” Please
confirm that such reference was also removed from the strategy disclosure.
RESPONSE: The
Trust confirms that the referenced disclosure was removed and is no longer present in the prospectus or SAI.
4. In
response to Comment 7 to the Initial Response Letter, you added disclosure indicating that
“more liquid” means “highly traded.” Please revise that disclosure
to clarify which entity (e.g., Newfleet) is making the determination on “highly
traded.”
RESPONSE: The
Trust will revise the disclosure to state, “(i.e., considered by Newfleet to be highly traded).”
5. We
don’t believe that the disclosure included in the response to Comment 7 to the Initial
Response Letter rises to the level of specificity that we were looking for with respect to
disclosure of attendant credit qualities. Therefore, please clarify with respect to the Fund’s
80% basket the applicable credit quality ratings.
RESPONSE: The
Trust believes the revised disclosure, as reflected in response to Comment 7 to the Initial Response Letter, appropriately reflects the
attendant credit qualities of the securities to be included in the 80% basket and, therefore, respectfully declines to make any additional
changes.
6. Response
to Comment 7 to the Initial Response Letter describes the fixed income sectors in which the
Fund will principally invest but does not disclose all fixed income sectors. Because you
don’t disclose all fixed income sectors in the “Principal Investment Strategy”
section, please supplementally confirm to the staff that you are aware that if the Fund’s
fixed income sector rotation changes, such that new fixed income sectors become principal
investments, you will update the corresponding bullet points in the “Principal Investment
Strategy” section.
RESPONSE: The
Trust acknowledges the staff’s comment and confirms that changes to the fixed income sectors in which the Fund principally invests
will be disclosed to shareholders.
7. The
penultimate bullet point included in the response to Comment 7 to the Initial Response Letter
includes a reference to Rule 144A. We ask that you add some additional disclosure explaining
Rule 144A in plain English or add a cross reference to where that Rule is explained in the
Fund prospectus or SAI.
RESPONSE: In
the Item 9 section, the Trust will add a cross reference to “Rule 144A Securities Risk” in the “Additional Information
Regarding the Fund’s Principal Risks” section.
8. The
staff reiterates the comment given as Comment 26 to the Initial Response Letter to revise
“MBS and ABS Risks” to be more attendant to the specific ABS and MBS in which
the Fund may invest.
RESPONSE: As
stated in the Initial Response Letter, the Trust has reviewed the referenced risk disclosure and does not believe any additional revisions
are necessary.
9. The
staff reiterates the comment given as Comment 28 to the Initial Response Letter to revise
“Sector Focus Risk” to be more specific to the sectors in which the Fund will
invest.
2
RESPONSE: As
stated in the Initial Response Letter, the Trust has reviewed the referenced risk disclosure and does not believe any additional revisions
are necessary.
10. In
response to Comment 32, you indicated that the Item 9 disclosure pertaining to ETFs will
be removed. Please confirm that you will also remove the Item 9 disclosure pertaining to
investments in other registered investment companies.
RESPONSE: The
Trust confirms that the Item 9 disclosure pertaining to investments in both ETFs and other registered investment companies will be removed.
11. The
staff reiterates the comment given as Comment 38 to the Initial Response Letter, as it is
the staff’s view that the 1991 Letter continues to be applicable.
RESPONSE: The
Trust respectfully declines to add the requested language for the reasons described in the Initial Response Letter, primarily that the
1998 Amendments did not incorporate into Form N-1A the interpretation from the 1991 Letter on foreign governments being subject to a
fund’s concentration policy.
12. The
response to Comment 41 to the Initial Response Letter includes disclosure stating, “The
derivative action provisions summarized above will not apply to claims brought under the
federal securities laws to the extent that any such federal laws, rules or regulations do
not permit such application.” Please delete “to the extent that any such federal
laws, rules or regulations do not permit such application.”
RESPONSE: The
Trust will make the requested change.
*
* *
Please
direct any questions or additional comments to me at the above-referenced telephone number or, in my absence, to Michael D. Mabry at
(215) 564-8011.
Very
truly yours,
/s/
Joel D. Corriero
Joel
D. Corriero
cc:
William
Smalley
Daphne Chisolm
Michael Mabry
3