Correspondence 0000894189-22-008867 from Series Portfolios Trust (CIK 0001650149)
Series Portfolios Trust (CIK 0001650149)
Date: Dec. 9, 2022 · CIK: 0001650149 · Accession: 0000894189-22-008867
AI Filing Summary & Sentiment
File numbers found in text: 333-206240, 811-23084
Letter
VIA EDGAR TRANSMISSION United States Securities and Exchange Commission Division of Investment Management File Nos. 333-206240 and 811-23084 Subversive Decarbonization ETF S000077930 Subversive Food Security ETF S000077931 Subversive Mental Health ETF S000077932
Dear Mr. Williams:
We are responding to comments received from the Securities and Exchange Commission’s (the “SEC”) Division of Investment Management staff (the “Staff”) on September 28, 2022 via telephone regarding the Trust’s Post-Effective Amendment (“PEA”) No. 142 to its registration statement. PEA No. 142 was filed pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the “Securities Act”) on Form N‑1A on August 12, 2022 for the purpose of registering three new series of the Trust: the Subversive Decarbonization ETF (the “Decarbonization Fund”), the Subversive Food Security ETF (the “Food Security Fund”), and the Subversive Mental Health ETF (the “Mental Health Fund”) (each a “Fund” and together, the “Funds”). A summary of the Staff’s comments, along with the Trust’s responses, is set forth below. Undefined capitalized terms used herein have the same meaning as in PEA No. 142.
For your convenience, the Staff’s comments have been reproduced in bold typeface immediately followed by the Trust’s responses.
The Trust's responses to your comments are as follows:
General Comments
1.Staff Comment: Where a comment is made in one location, it is applicable to all similar disclosure appearing elsewhere in the registration statement. The Staff reminds the Trust that that the Funds and its management are responsible for the accuracy and adequacy of their disclosures notwithstanding any review, comments, action, or absence of action, by the Staff. Please file your responses to the Staff’s comments on EDGAR at least five (5) days in advance of the effective date. Please also provide the Staff with a draft of the revised registration statement showing changes from the initial filing.
Response: The Trust responds by respectfully acknowledging the comment.
Cover Page
2.Staff Comment: Please update EDGAR with the ticker symbols for each Fund in accordance with Regulation S-T Rule 313(b)(1).
Response: The Trust responds by confirming each Fund’s ticker symbol will be included in a post-effective amendment filing and concurrently the tickers will be updated on EDGAR.
Decarbonization Fund Prospectus – Summary Section – Fees and Expenses of the Fund
3.Staff Comment: With respect to Other Expenses in the Fees and Expenses of the Fund table, please explain how the Fund determined that Other Expenses of 0.00% is a reasonable estimate.
Response: The Trust responds by supplementally noting the Fund estimates that Other Expenses for its initial fiscal year will be 0.00% due to its unitary fee arrangement with the investment adviser (the “Adviser”), pursuant to which the Adviser is responsible for paying all ordinary operating expenses of the Fund out of its management fee. The Fund does not anticipate incurring any other expenses during its initial fiscal year that would not be paid by the Adviser under the unitary fee arrangement. Accordingly, the Trust believes that the estimated Other Expenses for the Fund’s initial fiscal year are reasonable given the Fund’s unitary fee arrangement.
Decarbonization Fund Prospectus – Summary Section – Expense Example
4.Staff Comment: In the Expense Example, please delete the word “mutual” in the first sentence since the Fund is an ETF. Please make this change in the Expense Example for all Funds.
Response: The Trust responds by making the requested revision to the Expense Example for each of the Funds.
5.Staff Comment: Please revise the narrative disclosure immediately preceding the Expense Example to clarify that the Expense Example applies whether a shareholder holds or sells all of
their shares of the Fund, as there are no redemption fees or contingent deferred sales loads charged by the Fund.
Response: The Trust responds by making the requested revision to the Expense Example for each of the Funds.
Decarbonization Fund Prospectus – Summary Section – Principal Investment Strategies
6.Staff Comment: Please clarify how the Fund identifies decarbonization companies using sufficiently specific criteria in the disclosure. For example, companies that have 50% of assets, revenues, or profits tied to decarbonization. The Staff would expect the Fund to file a delaying amendment until issues related to Rule 35d-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) are resolved.
Response: The Trust responds by revising the Fund’s principal investment strategies as follows (changes shown in underline and strikethrough):
“The Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its net assets (plus any borrowings for investment purposes) primarily in equity securities of Decarbonization Companies, as defined below. Decarbonization Companies are companies that each has at least 35% of its assets in the tools, technology, infrastructure, or raw materials, in the opinion of Subversive Capital Advisor LLC (the “Adviser”), the Fund’s investment adviser, are involved in nuclear technology and infrastructure that support decarbonization efforts (and companies whose announced future capital expenditures are anticipated to result in that company’s assets meeting that same test), or the companies that each invests investing at least 35% of capital expenditures (either currently or announced future capital expenditures) in the and tools, technology, infrastructure, or raw materials necessary to that support the decarbonization of the current global energy supply chain. Applying the foregoing definition, Decarbonization Companies are generally expected to consist of companies dedicated to battery technology, companies involved in the production, distribution, and delivery of water and carbon, and companies involved in the infrastructure that supports decarbonization efforts (for example, nuclear technology), as well as the infrastructure that supports wind and solar networks. Decarbonization Companies are also rare earth mineral companies and the companies supporting them. The Fund does not consider “decarbonization” to mean “no carbon”. Rather, the Fund will invest in Decarbonization Companies that are expected to benefit from the global economic trend toward decarbonization, and companies that own the tools, technology, infrastructure, or raw materials urgently needed to power the modern world with much less reliance on carbon fuels. As a result, some anticipated portfolio companies will have exposure to natural gas as a transitory fuel, but the Fund will generally avoid crude oil.”
The Trust further responds by supplementally stating that the Trust believes each of the objective tests identified in revised disclosure (35% of assets (or whose announced future capital expenditures are anticipated to meet that same test) or 35% of capital expenditures) sufficiently meets an economic nexus between Decarbonization Companies, as defined in the above disclosure, and “decarbonization”, as the decarbonization industry is relatively nascent compared to the types and sizes of companies that are leading decarbonization efforts.
7.Staff Comment: The Prospectus states that the Fund will invest primarily in equity securities of companies that “in the opinion of Subversive Capital Advisor LLC” are involved in decarbonization efforts. Per the previous Staff’s prior comment, please revise “in the opinion of the Adviser” to tie such companies to a significant economic nexus (e.g., 50% of revenues or 50% of profits tied to decarbonization).
Response: Please see the Trust’s response to Staff Comment 6 above for the revised disclosure.
8.Staff Comment: The Fund identifies that it will invest in companies that are “involved in the infrastructure that supports decarbonization efforts.” Please clarify the nexus (e.g., 50% of revenues or 50% of profits tied to decarbonization) these companies have to decarbonization for purposes of the Fund’s 80% policy.
Response: Please see the Trust’s response to Staff Comment 6 above for the revised disclosure.
9.Staff Comment: The Staff notes that the Fund identifies it will invest in companies that invest in “technology and tools necessary to support the decarbonization of the global energy supply chain.” Please consider explaining “decarbonization of the global energy supply chain” in greater detail. Also, please consider incorporating some of that discussion at the beginning of the strategy discussion.
Response: The Trust responds by adding the following to Item 9 of the Trust’s registration statement:
“With respect to decarbonization of the current global energy supply chain, environmental and geopolitical shifts are fundamentally altering how energy is procured, transmitted, and stored, and that shift will be toward fuels that are less carbon intensive. These Decarbonization Companies will include nuclear reactor manufacturers, traditional utilities that allocate a portion of their energy grid to renewable energy sources, and companies supporting battery production and storage (such as lithium manufacturers).”
10.Staff Comment: The Decarbonization Fund’s disclosure states that: “Decarbonization Companies will include companies dedicated to battery technology, involved in the production, distribution, and delivery of water and carbon, and companies involved in the infrastructure that supports decarbonization efforts, as well as wind and solar networks.” If true, please
change “will include” to “are” and set forth all such decarbonization companies or the criteria used to classify them as such.
Response: The Trust responds by making the requested revision as identified in the response to Staff Comment 6 above.
11.Staff Comment: The Staff notes that the Fund may invest in securities of foreign (including emerging markets) issuers. If the Fund intends to invest in emerging market securities, please ensure appropriate risk disclosure regarding risks of investing in emerging markets is included per ADI 2020-11. Please also make corresponding changes to each Fund, as applicable.
Response: The Trust responds by revising each summary section risk disclosure as follows (additions shown in underline):
“Foreign Investments and Emerging Markets Risk. Securities of non-U.S. issuers, including those located in foreign countries, may involve special risks caused by foreign political, social and economic factors, including exposure to currency fluctuations, less liquidity, less developed and less efficient trading markets, political instability and less developed legal and auditing standards. These risks are heightened for investments in issuers organized or operating in emerging market countries.”
The Trust further responds by replacing the “Foreign Investments Risk” factor in Item 9 with the following risk disclosure:
“Foreign Investments and Emerging Markets Risk. Each Fund may invest in securities of non-U.S. issuers, including those located in foreign and developing countries. These securities involve special risks. Non-U.S. securities involve certain factors not typically associated with investing in U.S. securities including risks relating to: (i) currency exchange matters, including fluctuations in the rate of exchange between the U.S. dollar and the various non-U.S. currencies in which a Fund’s portfolio securities will be denominated, and costs associated with conversion of investment principal and income from one currency into another; (ii) differences between the U.S. and non-U.S. securities markets, including potential price volatility in and relative illiquidity of some non-U.S. securities markets, the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; (iii) certain economic and political risks, including potential exchange control regulations and potential restrictions on non-U.S. investment and repatriation of capital; and (iv) with respect to certain countries, the possibility of expropriation, confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains, other income or gross sale or disposition proceeds, limitations on the removal of funds or other assets of a Fund, political or social instability or diplomatic developments that could affect investments in those countries.
The non-U.S. securities in which a Fund invests may include securities of companies based in emerging countries or issued by the governments of such countries. Investing in securities of certain of such countries and companies involves considerations not usually associated with investing in securities of developed countries or of companies located in developed countries, including political and economic considerations, such as greater risks of expropriation, confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains, other income or gross sale or disposition proceeds, limitations on the removal of funds, nationalization and general social, political and economic instability; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; certain government policies that may restrict a Fund’s investment opportunities; and problems that may arise in connection with the clearance and settlement of trades. In addition, accounting and financial reporting standards that prevail in certain of such countries generally are not equivalent to standards in more developed countries and, consequently, less information is available to investors in companies located in these countries than is available to investors in companies located in more developed countries. There is also less regulation, generally, of the securities markets in emerging countries than there is in more developed countries. Placing securities with a custodian in an emerging country may also present considerable risks.
A number of countries have experienced severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets have experienced extreme volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread. Responses to the financial problems by governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching. These events could negatively affect the value and liquidity of a Fund’s investments.”
12.Staff Comment: The Fund states that it
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CORRESP 1 filename1.htm Document Series Portfolios Trust c/o U.S. Bank Global Fund Services 615 East Michigan Street Milwaukee, WI 53202 December 9, 2022 VIA EDGAR TRANSMISSION Mr. Matthew Williams United States Securities and Exchange Commission Division of Investment Management 100 F Street N.E. Washington, D.C. 20549 Re: Series Portfolios Trust (the “Trust”) File Nos. 333-206240 and 811-23084 Subversive Decarbonization ETF S000077930 Subversive Food Security ETF S000077931 Subversive Mental Health ETF S000077932 Dear Mr. Williams: We are responding to comments received from the Securities and Exchange Commission’s (the “SEC”) Division of Investment Management staff (the “Staff”) on September 28, 2022 via telephone regarding the Trust’s Post-Effective Amendment (“PEA”) No. 142 to its registration statement. PEA No. 142 was filed pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the “Securities Act”) on Form N‑1A on August 12, 2022 for the purpose of registering three new series of the Trust: the Subversive Decarbonization ETF (the “Decarbonization Fund”), the Subversive Food Security ETF (the “Food Security Fund”), and the Subversive Mental Health ETF (the “Mental Health Fund”) (each a “Fund” and together, the “Funds”). A summary of the Staff’s comments, along with the Trust’s responses, is set forth below. Undefined capitalized terms used herein have the same meaning as in PEA No. 142. For your convenience, the Staff’s comments have been reproduced in bold typeface immediately followed by the Trust’s responses. The Trust's responses to your comments are as follows: General Comments 1 1.Staff Comment: Where a comment is made in one location, it is applicable to all similar disclosure appearing elsewhere in the registration statement. The Staff reminds the Trust that that the Funds and its management are responsible for the accuracy and adequacy of their disclosures notwithstanding any review, comments, action, or absence of action, by the Staff. Please file your responses to the Staff’s comments on EDGAR at least five (5) days in advance of the effective date. Please also provide the Staff with a draft of the revised registration statement showing changes from the initial filing. Response: The Trust responds by respectfully acknowledging the comment. Cover Page 2.Staff Comment: Please update EDGAR with the ticker symbols for each Fund in accordance with Regulation S-T Rule 313(b)(1). Response: The Trust responds by confirming each Fund’s ticker symbol will be included in a post-effective amendment filing and concurrently the tickers will be updated on EDGAR. Decarbonization Fund Prospectus – Summary Section – Fees and Expenses of the Fund 3.Staff Comment: With respect to Other Expenses in the Fees and Expenses of the Fund table, please explain how the Fund determined that Other Expenses of 0.00% is a reasonable estimate. Response: The Trust responds by supplementally noting the Fund estimates that Other Expenses for its initial fiscal year will be 0.00% due to its unitary fee arrangement with the investment adviser (the “Adviser”), pursuant to which the Adviser is responsible for paying all ordinary operating expenses of the Fund out of its management fee. The Fund does not anticipate incurring any other expenses during its initial fiscal year that would not be paid by the Adviser under the unitary fee arrangement. Accordingly, the Trust believes that the estimated Other Expenses for the Fund’s initial fiscal year are reasonable given the Fund’s unitary fee arrangement. Decarbonization Fund Prospectus – Summary Section – Expense Example 4.Staff Comment: In the Expense Example, please delete the word “mutual” in the first sentence since the Fund is an ETF. Please make this change in the Expense Example for all Funds. Response: The Trust responds by making the requested revision to the Expense Example for each of the Funds. 5.Staff Comment: Please revise the narrative disclosure immediately preceding the Expense Example to clarify that the Expense Example applies whether a shareholder holds or sells all of 2 their shares of the Fund, as there are no redemption fees or contingent deferred sales loads charged by the Fund. Response: The Trust responds by making the requested revision to the Expense Example for each of the Funds. Decarbonization Fund Prospectus – Summary Section – Principal Investment Strategies 6.Staff Comment: Please clarify how the Fund identifies decarbonization companies using sufficiently specific criteria in the disclosure. For example, companies that have 50% of assets, revenues, or profits tied to decarbonization. The Staff would expect the Fund to file a delaying amendment until issues related to Rule 35d-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) are resolved. Response: The Trust responds by revising the Fund’s principal investment strategies as follows (changes shown in underline and strikethrough): “The Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its net assets (plus any borrowings for investment purposes) primarily in equity securities of Decarbonization Companies, as defined below. Decarbonization Companies are companies that each has at least 35% of its assets in the tools, technology, infrastructure, or raw materials, in the opinion of Subversive Capital Advisor LLC (the “Adviser”), the Fund’s investment adviser, are involved in nuclear technology and infrastructure that support decarbonization efforts (and companies whose announced future capital expenditures are anticipated to result in that company’s assets meeting that same test), or the companies that each invests investing at least 35% of capital expenditures (either currently or announced future capital expenditures) in the and tools, technology, infrastructure, or raw materials necessary to that support the decarbonization of the current global energy supply chain. Applying the foregoing definition, Decarbonization Companies are generally expected to consist of companies dedicated to battery technology, companies involved in the production, distribution, and delivery of water and carbon, and companies involved in the infrastructure that supports decarbonization efforts (for example, nuclear technology), as well as the infrastructure that supports wind and solar networks. Decarbonization Companies are also rare earth mineral companies and the companies supporting them. The Fund does not consider “decarbonization” to mean “no carbon”. Rather, the Fund will invest in Decarbonization Companies that are expected to benefit from the global economic trend toward decarbonization, and companies that own the tools, technology, infrastructure, or raw materials urgently needed to power the modern world with much less reliance on carbon fuels. As a result, some anticipated portfolio companies will have exposure to natural gas as a transitory fuel, but the Fund will generally avoid crude oil.” 3 The Trust further responds by supplementally stating that the Trust believes each of the objective tests identified in revised disclosure (35% of assets (or whose announced future capital expenditures are anticipated to meet that same test) or 35% of capital expenditures) sufficiently meets an economic nexus between Decarbonization Companies, as defined in the above disclosure, and “decarbonization”, as the decarbonization industry is relatively nascent compared to the types and sizes of companies that are leading decarbonization efforts. 7.Staff Comment: The Prospectus states that the Fund will invest primarily in equity securities of companies that “in the opinion of Subversive Capital Advisor LLC” are involved in decarbonization efforts. Per the previous Staff’s prior comment, please revise “in the opinion of the Adviser” to tie such companies to a significant economic nexus (e.g., 50% of revenues or 50% of profits tied to decarbonization). Response: Please see the Trust’s response to Staff Comment 6 above for the revised disclosure. 8.Staff Comment: The Fund identifies that it will invest in companies that are “involved in the infrastructure that supports decarbonization efforts.” Please clarify the nexus (e.g., 50% of revenues or 50% of profits tied to decarbonization) these companies have to decarbonization for purposes of the Fund’s 80% policy. Response: Please see the Trust’s response to Staff Comment 6 above for the revised disclosure. 9.Staff Comment: The Staff notes that the Fund identifies it will invest in companies that invest in “technology and tools necessary to support the decarbonization of the global energy supply chain.” Please consider explaining “decarbonization of the global energy supply chain” in greater detail. Also, please consider incorporating some of that discussion at the beginning of the strategy discussion. Response: The Trust responds by adding the following to Item 9 of the Trust’s registration statement: “With respect to decarbonization of the current global energy supply chain, environmental and geopolitical shifts are fundamentally altering how energy is procured, transmitted, and stored, and that shift will be toward fuels that are less carbon intensive. These Decarbonization Companies will include nuclear reactor manufacturers, traditional utilities that allocate a portion of their energy grid to renewable energy sources, and companies supporting battery production and storage (such as lithium manufacturers).” 10.Staff Comment: The Decarbonization Fund’s disclosure states that: “Decarbonization Companies will include companies dedicated to battery technology, involved in the production, distribution, and delivery of water and carbon, and companies involved in the infrastructure that supports decarbonization efforts, as well as wind and solar networks.” If true, please 4 change “will include” to “are” and set forth all such decarbonization companies or the criteria used to classify them as such. Response: The Trust responds by making the requested revision as identified in the response to Staff Comment 6 above. 11.Staff Comment: The Staff notes that the Fund may invest in securities of foreign (including emerging markets) issuers. If the Fund intends to invest in emerging market securities, please ensure appropriate risk disclosure regarding risks of investing in emerging markets is included per ADI 2020-11. Please also make corresponding changes to each Fund, as applicable. Response: The Trust responds by revising each summary section risk disclosure as follows (additions shown in underline): “Foreign Investments and Emerging Markets Risk. Securities of non-U.S. issuers, including those located in foreign countries, may involve special risks caused by foreign political, social and economic factors, including exposure to currency fluctuations, less liquidity, less developed and less efficient trading markets, political instability and less developed legal and auditing standards. These risks are heightened for investments in issuers organized or operating in emerging market countries.” The Trust further responds by replacing the “Foreign Investments Risk” factor in Item 9 with the following risk disclosure: “Foreign Investments and Emerging Markets Risk. Each Fund may invest in securities of non-U.S. issuers, including those located in foreign and developing countries. These securities involve special risks. Non-U.S. securities involve certain factors not typically associated with investing in U.S. securities including risks relating to: (i) currency exchange matters, including fluctuations in the rate of exchange between the U.S. dollar and the various non-U.S. currencies in which a Fund’s portfolio securities will be denominated, and costs associated with conversion of investment principal and income from one currency into another; (ii) differences between the U.S. and non-U.S. securities markets, including potential price volatility in and relative illiquidity of some non-U.S. securities markets, the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; (iii) certain economic and political risks, including potential exchange control regulations and potential restrictions on non-U.S. investment and repatriation of capital; and (iv) with respect to certain countries, the possibility of expropriation, confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains, other income or gross sale or disposition proceeds, limitations on the removal of funds or other assets of a Fund, political or social instability or diplomatic developments that could affect investments in those countries. 5 The non-U.S. securities in which a Fund invests may include securities of companies based in emerging countries or issued by the governments of such countries. Investing in securities of certain of such countries and companies involves considerations not usually associated with investing in securities of developed countries or of companies located in developed countries, including political and economic considerations, such as greater risks of expropriation, confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains, other income or gross sale or disposition proceeds, limitations on the removal of funds, nationalization and general social, political and economic instability; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; certain government policies that may restrict a Fund’s investment opportunities; and problems that may arise in connection with the clearance and settlement of trades. In addition, accounting and financial reporting standards that prevail in certain of such countries generally are not equivalent to standards in more developed countries and, consequently, less information is available to investors in companies located in these countries than is available to investors in companies located in more developed countries. There is also less regulation, generally, of the securities markets in emerging countries than there is in more developed countries. Placing securities with a custodian in an emerging country may also present considerable risks. A number of countries have experienced severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets have experienced extreme volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread. Responses to the financial problems by governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching. These events could negatively affect the value and liquidity of a Fund’s investments.” 12.Staff Comment: The Fund states that it