SecProbe.io

CORRESP
1
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

J.
Stephen Feinour, Jr.

(215) 564-8521

jfeinourjr@stradley.com

July 5, 2023

Filed via EDGAR

Ms.
Rebecca Marquigny

U.S. Securities and Exchange Commission

100
F Street, NE

Washington, DC 20549

Subject: Franklin
Templeton ETF Trust (the “Trust”)

 (File
Nos. 333-208873; 811-23124)

Dear
Ms. Marquigny:

On behalf of the Trust, submitted herewith
via the EDGAR system are the responses to the comments of the staff (the “Staff”) of the U.S. Securities
and Exchange Commission (the “Commission”) provided via telephone to J. Stephen Feinour, Jr. with
regard to Post-Effective Amendment Nos. 95/99 to the Trust’s Registration Statement on Form N-1A (the
“Amendment”) related to the BrandywineGLOBAL – U.S. Fixed Income ETF series of the Trust (the “Fund”),
which was filed with the Commission on April 14, 2023 under the Securities Act of 1933 (the “1933 Act”)
and the Investment Company Act of 1940 (the “1940 Act”).  The Staff’s comments are summarized below,
followed by the Trust’s

responses thereto.  Terms not defined herein have the meaning set forth for that
term in the Amendment.

1.  Comment:
 Please provide a completed fee table and expense example. “Other expenses” are estimated to be “None.”
 Please explain the basis for this estimate.

 Response: Attached as Exhibit A is a completed fee
table and expense example.

“Other expenses” are estimated to be
“None” because the Fund will operate under a unitary management fee structure and other expenses,
therefore, are estimated to be “None” for the Fund’s first fiscal year.

2.  Comment:
 Per the format shown in Item 3 of Form N-1A, please present the second sentence of the fee table preamble
in bold font.

 Response:
 The disclosure has been revised as requested.

3.  Comment:
 Please add a sentence to the Portfolio Turnover section stating that the Fund has not yet commenced
operations and, therefore, portfolio turnover information is not yet available.

 Response:
The disclosure has been revised as requested.

4.  Comment:
 In the Principal Investment Strategies section, please address how the sub-advisor will make decisions
to buy, sell, or hold investments and discuss the sub-advisor’s process for analyzing investments.
In addition, please discuss the sub-advisor’s portfolio construction process, including any portfolio
constraints that are in place. Please revise the strategy discussion to provide greater insight on the
sub-advisor’s security selection and portfolio construction process.

 Response:
The last paragraph of the Principal Investment Strategies section has been replaced with the following:

The portfolio managers’ investment process is top-down, macro-economic driven
and value oriented. Their buy discipline is highlighted by patience and conviction. The portfolio managers
develop a viewpoint on the business cycle in conjunction with a

value-based analysis of U.S. dollar-denominated, investment-grade fixed income
securities to determine the Fund’s strategy duration, sector and quality exposures over time. Security
selection is determined through analysis of both top-down, macroeconomic conditions as well as bottom-up,
fundamental analysis within the context of their value-oriented framework. They focus their investments
on a limited number of securities that they believe represent attractive value, rather than invest the
portfolio across a large spectrum of securities in attempt to replicate an index-like distribution. If
they do not find value in a particular sector, industry or security, they will not invest in it.  The
portfolio managers utilize both qualitative and quantitative criteria (including proprietary quantitative
models) as part of the portfolio construction process, including in
determining that an investment represents an attractive value. Quantitative models are proprietary systems
that rely on mathematical computations to identify investment opportunities.

The
portfolio managers sell fixed income securities or sectors when they no longer meet their value criteria.
This could be due to the impact of the business cycle or fundamental changes affecting yield, spread
or price. For example, they typically sell corporate bonds and mortgage-backed securities when spreads
narrow significantly or when changing fundamentals introduce risks outweighing potential rewards. In
some cases, they may modify the characteristics or risk profile of a sector instead of completely eliminating
exposure, such as by shortening duration.

5.  Comment:
 Please revise the Fund’s 80% investment policy to ensure investors understand how the phrase “other
instruments with similar economic characteristics” applies under Rule 35d-1 under the 1940 Act. Specifically,
please insert “of U.S. issuers” between “other instruments” and “with similar economic characteristics.”
 If these changes will not be accurate, please supplementally explain why not and identify the precise
economic characteristics to which the statement refers. In your response, also state the relevant criteria
and metrics the portfolio managers apply to analyze these characteristics and effectively distinguish
between the fixed income instruments of a U.S. issuer from that of a non-U.S. issuer. Please describe
these economic characteristics (1) in terms of objective criteria

unique to U.S. issuers and (2) clearly state how they differ from instruments
of non-U.S. issuers.

 Response:
The above-cited reference to “other instruments with similar economic characteristics” is intended
to preserve the flexibility for the Fund to invest in other instruments in addition to U.S. fixed
income securities (such as other ETFs, derivatives, etc.) that provide exposure and have economic characteristics
similar to U.S. fixed income securities and count such investments for purposes of the Fund’s 80% investment
policy.  This is consistent with the Commission’s statement in the Rule 35d-1 adopting release that
“[i]n appropriate circumstances” an investment company could “include a synthetic instrument in
the 80% basket if it has economic characteristics similar to the securities included in that basket.”
See Investment Company Names, Investment Company Act Release No. 24828, at n. 13 (Jan. 17, 2001).  The
Fund’s 80% investment policy has been revised as follows:

Under
normal market conditions, the Fund invests at least 80% of its net assets in U.S. fixed income securities
or other instruments with similar economic characteristics.

In addition, the Trust
has added the following disclosure to the Item 9 Principal Investment Policies and Practices section:

For purposes of determining
whether an instrument is economically tied to the U.S., the Fund uses the country assigned to a security
by Bloomberg or another unaffiliated third-party data provider. The data providers use various criteria
to determine the country to which a security is economically tied.  Examples include the following:
(1) the country under which the issuer is organized; (2) the location of the issuer’s principal place
of business or principal office; (3) where the issuer’s securities are listed or traded principally
on an exchange or over-the-counter market; and (4) where the issuer conducts the predominant part of
its business activities or derives a significant portion (e.g., at least 50%) of its revenues or profits.

6.
 Comment:  The Principal Investment
Strategies section states, “Fixed income securities of U.S. issuers include . . . freely transferable
promissory notes and bankers acceptances issued by industrial, utility,

finance, commercial banking or bank holding company organizations.” Please revise
the disclosure to clarify whether the phrase “issued by industrial, utility, finance, commercial banking
or bank holding company organizations” applies to “freely transferrable promissory notes” or just
“banker acceptances.”

 Response:
The Trust has revised the disclosure as follows:

U.S.
fixed income securities include . . .U.S. corporate debt securities, including debentures, bonds (including
zero coupon bonds), bankers acceptances (issued by industrial, utility, finance, commercial banking or
bank holding company organizations), convertible and non-convertible notes, commercial paper, certificates
of deposits and freely transferable promissory notes;…

7.  Comment:
 The Principal Investment Strategies section states, “Fixed income securities of U.S. issuers also
include: (i) securities included in the Bloomberg U.S. Aggregate Index; and (ii) fixed income securities
denominated in U.S. dollars issued by foreign banks, corporations, government agencies, sovereigns, and
supranational organizations, and registered with the U.S. Securities and Exchange Commission (SEC) for
sale in the U.S., such as Yankee bonds and Eurobonds.” Please delete (ii) above or explain in your
response why you believe characterizing such instruments as “fixed income securities of U.S. issuers”
is not misleading given the Fund’s name. In particular, please explain the rationale for concluding
that bonds such as Yankee bonds and Eurobonds issued by foreign companies or foreign governments have
the same economic characteristics and risk profile as “fixed income securities of U.S. issuers” in
this context.

 Response:
As noted in response to Comment 5 above, the Trust has revised the Fund’s 80% investment policy.  In
addition, the Trust has revised the above cited disclosure as follows:

U.S.
fixed income securities also include securities included in the Bloomberg U.S. Aggregate Index.

The
Bloomberg U.S. Aggregate Index is commonly used as a proxy/benchmark for measuring the performance of
the U.S. investment

grade bond market and, therefore, the Trust believes that the constituents of
that index may be counted towards the Fund’s 80% investment policy.

8.  Comment:
The Principal Investment Strategies section states, “Although the Fund may invest in securities of
any maturity or duration, under normal conditions, the portfolio managers typically seek to maintain
a dollar-weighted average effective duration for the Fund’s portfolio, including derivatives, of 1
to 10 years.  The dollar-weighted average effective duration of the Fund’s portfolio may, however,
exceed this range materially from time to time depending on the sub-advisor’s outlook on changing market,
economic, political and other conditions.” In the Item 9 section, please clarify more specifically
where the sub-advisor wants the Fund’s typical dollar-weighted average effective duration to be within
that 1-10 year range. Please also explain how the sub-advisor decides when to exceed the broader range
of 1-10 years and what is the sub-advisor’s “market, economic, and political” outlook based on.
Please consider describing the general circumstances in which the Fund is likely to exceed the portfolio’s
typical duration range.

 Response: The Trust respectfully
notes that the Fund’s typical dollar-weighted average effective duration is accurately described and
the sub-advisor does not target any particular area within that 1-10 year range.  In response to this
comment, the Trust has revised the Item 9 disclosure as follows:

Although
the Fund may invest in securities of any maturity or duration, under normal conditions, the portfolio
managers typically seek to maintain a dollar-weighted average effective duration for the Fund’s portfolio,
including derivatives, of 1 to 10 years.  The dollar-weighted average effective duration of the Fund’s
portfolio may, however, exceed this range materially from time to time depending on the sub-advisor’s
valuation analysis and macro-economic outlook. For example, in situations where elevated interest rates
have a detrimental effect on consumer or business conditions, resulting in a slowdown in economic activity,
the sub-advisor may materially increase duration with the objective of profiting from potential changes
in central bank policies, such as a reduction in interest rates, aimed at revitalizing economic activity.

9.
 Comment:  In the mortgage-backed
securities discussion in the Principal Investment Strategies section, (1) based on the Fund’s investment
strategy, please identify the most appropriate mortgage-backed security instruments based on relevant
facts and circumstances, and (2) discuss the relevant selection and weighting criteria the sub-advisor
uses to choose which securities to buy or sell. Please describe the process the sub-advisor follows to
make these decisions.  In the Item 9 section, please also discuss, in greater detail, the selection factors
specific to CMBS, CMOs, forward commitments, delayed delivery instruments, restricted investments, CDOs,
and CLOs. With regard to CDOs, please identify the type of collateral held by the special purpose entity
and the CDO tranche in which the Fund invests.

 Response: The Trust confirms that prospectus identifies
the different types of mortgage-backed securities that the Fund may utilize as part of its principal
investment strategies.  Please also see the response to Comment 4 above.  The Trust confirms that the
security selection disclosure adequately and accurately addresses the criteria the sub-advisor uses in
determining what securities to buy or sell.  The Trust has removed references to investments in CDOs
from the prospectus while retaining references to CLOs.

10.  Comment:
 In the Principal Investment Strategies section, the disclosure states that, “Derivatives are taken
into account when determining compliance with the Fund’s 80% investment policy.” Please explain what
“taken into account” means or consider re-writing the sentence to make the meaning clearer.

 Response:
The Trust has revised the above-cited sentence as follows:

Derivatives
with economic characteristics similar to U.S. fixed income securities will be counted towards the Fund’s
80% investment policy.

11.  Comment:
 Please re-write in plain English the last paragraph of the Principal Investment Strategies section and
avoid jargon to the extent possible. Please affirmatively state the metrics the sub-advisor uses to determine
that a security is trading far enough “below its intrinsic value.” Please also clarify what it means
to “rotate portfolio exposures at both the

duration, sector, and individual issuer levels as new opportunities arise” or
illustrate the meaning of this disclosure through examples.

 Response: Please see the response to Comment 4 above.

12.
 Comment:  Under the Market risk,
please review the Fund’s COVID-19 disclosure and consider updating the language if appropriate.

 Response:
The Trust has updated the COVID-19 disclosure under Market Risk as reflected below:

The
global outbreak of the novel strain of coronavirus, COVID-19 and its subsequent
variants, has resulted in market closures and dislocations, extreme volatility, liquidity
constraints and increased trading costs. Efforts to contain the spread of COVID-19 have resulted
in global travel restrictions and disruptions of healthcare systems, business operations andThe
long-term impact on economies, markets, industries and individual issuers is not known. Some sectors
of the economy and individual issuers have experienced or may experience particularly large losses. Periods
of extreme volatility in the financial markets; reduced liquidity of many instruments; and disruptions
to
supply chains, layoffs, volatility in consumer demand for certain
products, defaults and credit ratings downgrades, and other significant economic impacts. The effects
of COVID-19 have impacted global economic activity across many industries and may heighten other pre-existing
political, social and economic risks, locally or globally. The full impact of the COVID-19 pandemic is
unpredictable and may adversely affect the Fund’s performance.and employee availability,
may continue for some ti