Correspondence 0000894189-24-003616 from Listed Funds Trust (CIK 0001683471)
Listed Funds Trust (CIK 0001683471)
Date: June 14, 2024 · CIK: 0001683471 · Accession: 0000894189-24-003616
AI Filing Summary & Sentiment
File numbers found in text: 333-215588, 811-23226
Referenced dates: April 24, 2024
Letter
Division of Investment Management File Nos. 333-215588 and 811-23226 Roundhill Video Games ETF (“NERD”) Roundhill Sports Betting & iGaming ETF (“BETZ”) Roundhill Magnificent Seven ETF (“MAGS”) (collectively, the “Funds”)
Dear Ms. Lithotomos:
This correspondence responds to additional comments the Trust received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission on April 26, 2024, with respect to Post-Effective Amendment No. 315 to the Trust’s Registration Statement on Form N-1A filed on February 28, 2024 (SEC Accession 0000894189-24-001456) (the “Amendment”). The Amendment subsequently went automatically effective pursuant to Rule 485(a) on April 30, 2024. For your convenience, the comments have been reproduced below with the Trust’s response following each comment. Capitalized terms not otherwise defined herein have the same meaning as in the Amendment.
Prospectus Comments:
Comment 1. Regarding NERD and BETZ, please provide the changes to their respective portfolios that were required for the transition from the old index to the new index.
Response: The Registrant has attached as Appendix A hereto the changes to each Fund’s portfolio to align it with the Fund’s Index.
Comment 2. Regarding BETZ, please provide a list of the companies currently included in the Fund and its Index.
Response: The Trust has attached hereto as Appendix B a list of the Index’s components and the Fund’s portfolio holdings, each as of April 30, 2024.
Comment 3. Regarding BETZ, with respect to the disclosure in the Principal Investment Strategies section that reads, “[t]he Index Provider estimates the percent revenue a company will derive from its exposure to each theme at a point in time five years forward, which translates
to the following scores: 0 = less than 10% revenue, 1 = 10% - 25% of revenue for a producer or supplier …,” please explain specifically why levels down to 10% of projected revenue five years in the future is reasonable.
Response: The Adviser believes the Index methodology, including the possible inclusion of an issuer that has projected revenue from Sports Betting and/or iGaming in five years of 10%, is reasonable given the emergent nature of the Sports Better and iGaming industries. For clarity, a security the issuer of which is estimated to derive 10% of its revenue from its exposure to a Sports Betting and/or iGaming theme at a point in time five years forward would be eligible for inclusion in the Index only to the extent the Index Provider, Morningstar, Inc., has also determined that such issuer is a producer of related goods or services or a supplier of those producers and “highly likely to enjoy a material net profit increase from its exposure to [its] subtheme over the next five years.”1 Whether such an issuer would be included as a component of the Index and thus, potentially a holding of the Fund, and the Index weight of such issuer depends on the size of the universe of eligible issuers and the number of eligible issuers with scores higher than 1. The number of components in the Index is not set, and is determined by the Index Provider based on a variety of factors, including the selection and eligibility criteria at the time of reconstitution. As of March 31, 2024, the Index had 32 components.
For emergent industries, revenue is often not a good indicator of whether an issuer has a meaningful connection to a particular industry. For example, an issuer’s sole business may be producing products used by iGaming industry participants but because that issuer’s business is new or its business model is flawed, it may not be generating any revenue. To the other extreme, an issuer may be a large and very profitable conglomerate that has determined to test out the viability of a business line focused on the iGaming industry. The revenue generated from the conglomerate’s new venture may be minimal in comparison to the revenue generated by its other business ventures, but nonetheless significant in comparison to the revenue earned by other issuers pursuing similar ventures or meaningful in terms of its impact on the industry. The SEC has also acknowledged that revenue may not be the most appropriate criterion to determine the existence of a meaningful relationship between a security and an industry. In the adopting release for the amendments to Rule 35d-12 (the “Amendment Release”), the SEC stated that in addition to a 50% revenue criterion, “ [t]here also may be instances where the percentage could be smaller, such as where a large company is a dominant firm in a given industry (e.g., the firm is an acknowledged leader in the industry).”
In addition, as previously noted in the Trust’s response letter filed on April 24, 2024, the Index selection criteria allocates a greater weight to those constituents that derive a higher percentage of their revenue from the industry-related activities described in the Fund’s investment strategy. When combined with the revenue scores and index weighting methodology, the requisite theme definitions further substantiate the meaningful nexus between the Index constituents and the industry suggested by the Fund’s name.
Comment 4. Pursuant to the Staff’s prior comment regarding swap contract expense, as reflected in comment no. 9 in the Trust’s letter dated April 24, 2024, please provide supplementally an estimate of the cost of the Fund’s swaps and forwards as a percentage of the Fund’s assets for the most recent fiscal year.
1 See Construction Rules for the Morningstar Sports Betting & iGaming Select Index available at https://indexes.morningstar.com/indexes/details/morningstar-sports-betting-igaming-select-FS0000IBSU?tab=overview.
2 See Investment Company Names, Investment Company Act Release No. 35000 (Sept, 20, 2023).
Response: The net cost of the Fund’s swaps contracts as a percentage of the Fund’s assets for its most recent fiscal year amounted to approximately $8,140. This amount reflects approximately $157,423 in interest income and accreted value attributable to government securities that serve as collateral for the Fund’s swaps contracts.
* * *
If you have any questions regarding these responses, please do not hesitate to contact the undersigned at (608) 716-8890 or chad.fickett@usbank.com.
Sincerely,
/s/ Chad Fickett
Show Raw Text
CORRESP 1 filename1.htm Document LISTED FUNDS TRUST c/o U.S. Bancorp Fund Services, LLC 615 East Michigan Street | Milwaukee, Wisconsin 53202 June 14, 2024 Ms. Valerie Lithotomos U.S. Securities and Exchange Commission Division of Investment Management 100 F Street NE Washington, DC 20549 Re: Listed Funds Trust (the “Trust”) File Nos. 333-215588 and 811-23226 Roundhill Video Games ETF (“NERD”) Roundhill Sports Betting & iGaming ETF (“BETZ”) Roundhill Magnificent Seven ETF (“MAGS”) (collectively, the “Funds”) Dear Ms. Lithotomos: This correspondence responds to additional comments the Trust received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission on April 26, 2024, with respect to Post-Effective Amendment No. 315 to the Trust’s Registration Statement on Form N-1A filed on February 28, 2024 (SEC Accession 0000894189-24-001456) (the “Amendment”). The Amendment subsequently went automatically effective pursuant to Rule 485(a) on April 30, 2024. For your convenience, the comments have been reproduced below with the Trust’s response following each comment. Capitalized terms not otherwise defined herein have the same meaning as in the Amendment. Prospectus Comments: Comment 1. Regarding NERD and BETZ, please provide the changes to their respective portfolios that were required for the transition from the old index to the new index. Response: The Registrant has attached as Appendix A hereto the changes to each Fund’s portfolio to align it with the Fund’s Index. Comment 2. Regarding BETZ, please provide a list of the companies currently included in the Fund and its Index. Response: The Trust has attached hereto as Appendix B a list of the Index’s components and the Fund’s portfolio holdings, each as of April 30, 2024. Comment 3. Regarding BETZ, with respect to the disclosure in the Principal Investment Strategies section that reads, “[t]he Index Provider estimates the percent revenue a company will derive from its exposure to each theme at a point in time five years forward, which translates 1 to the following scores: 0 = less than 10% revenue, 1 = 10% - 25% of revenue for a producer or supplier …,” please explain specifically why levels down to 10% of projected revenue five years in the future is reasonable. Response: The Adviser believes the Index methodology, including the possible inclusion of an issuer that has projected revenue from Sports Betting and/or iGaming in five years of 10%, is reasonable given the emergent nature of the Sports Better and iGaming industries. For clarity, a security the issuer of which is estimated to derive 10% of its revenue from its exposure to a Sports Betting and/or iGaming theme at a point in time five years forward would be eligible for inclusion in the Index only to the extent the Index Provider, Morningstar, Inc., has also determined that such issuer is a producer of related goods or services or a supplier of those producers and “highly likely to enjoy a material net profit increase from its exposure to [its] subtheme over the next five years.”1 Whether such an issuer would be included as a component of the Index and thus, potentially a holding of the Fund, and the Index weight of such issuer depends on the size of the universe of eligible issuers and the number of eligible issuers with scores higher than 1. The number of components in the Index is not set, and is determined by the Index Provider based on a variety of factors, including the selection and eligibility criteria at the time of reconstitution. As of March 31, 2024, the Index had 32 components. For emergent industries, revenue is often not a good indicator of whether an issuer has a meaningful connection to a particular industry. For example, an issuer’s sole business may be producing products used by iGaming industry participants but because that issuer’s business is new or its business model is flawed, it may not be generating any revenue. To the other extreme, an issuer may be a large and very profitable conglomerate that has determined to test out the viability of a business line focused on the iGaming industry. The revenue generated from the conglomerate’s new venture may be minimal in comparison to the revenue generated by its other business ventures, but nonetheless significant in comparison to the revenue earned by other issuers pursuing similar ventures or meaningful in terms of its impact on the industry. The SEC has also acknowledged that revenue may not be the most appropriate criterion to determine the existence of a meaningful relationship between a security and an industry. In the adopting release for the amendments to Rule 35d-12 (the “Amendment Release”), the SEC stated that in addition to a 50% revenue criterion, “ [t]here also may be instances where the percentage could be smaller, such as where a large company is a dominant firm in a given industry (e.g., the firm is an acknowledged leader in the industry).” In addition, as previously noted in the Trust’s response letter filed on April 24, 2024, the Index selection criteria allocates a greater weight to those constituents that derive a higher percentage of their revenue from the industry-related activities described in the Fund’s investment strategy. When combined with the revenue scores and index weighting methodology, the requisite theme definitions further substantiate the meaningful nexus between the Index constituents and the industry suggested by the Fund’s name. Comment 4. Pursuant to the Staff’s prior comment regarding swap contract expense, as reflected in comment no. 9 in the Trust’s letter dated April 24, 2024, please provide supplementally an estimate of the cost of the Fund’s swaps and forwards as a percentage of the Fund’s assets for the most recent fiscal year. 1 See Construction Rules for the Morningstar Sports Betting & iGaming Select Index available at https://indexes.morningstar.com/indexes/details/morningstar-sports-betting-igaming-select-FS0000IBSU?tab=overview. 2 See Investment Company Names, Investment Company Act Release No. 35000 (Sept, 20, 2023). 2 Response: The net cost of the Fund’s swaps contracts as a percentage of the Fund’s assets for its most recent fiscal year amounted to approximately $8,140. This amount reflects approximately $157,423 in interest income and accreted value attributable to government securities that serve as collateral for the Fund’s swaps contracts. * * * If you have any questions regarding these responses, please do not hesitate to contact the undersigned at (608) 716-8890 or chad.fickett@usbank.com. Sincerely, /s/ Chad Fickett Chad Fickett Secretary 3 Appendix A Summary of Changes (NERD) Long Name Ticker Weight As of 9.26.22 (%) Weight As of 9.23.22 (%) Weight Change (%) NINTENDO CO LTD 7974 18.00 2.95 15.05 ELECTRONIC ARTS INC EA 10.47 3.94 6.53 ROBLOX CORP -CLASS A RBLX 6.53 0.00 6.53 TAKE-TWO INTERACTIVE SOFTWRE TTWO 6.42 3.93 2.50 BANDAI NAMCO HOLDINGS INC 7832 3.47 0.00 3.47 NEXON CO LTD 3659 3.27 2.21 1.06 UNITY SOFTWARE INC U 2.90 2.83 0.07 CAPCOM CO LTD 9697 2.68 2.96 -0.28 KRAFTON INC 259960 2.51 4.73 -2.22 EMBRACER GROUP AB EMBRACB 2.33 0.00 2.33 KONAMI GROUP CORP 9766 2.28 2.23 0.05 NCSOFT CORP 36570 2.01 2.01 0.00 SQUARE ENIX HOLDINGS CO LTD 9684 1.97 2.83 -0.87 CD PROJEKT SA CDR 1.86 2.74 -0.88 APPLOVIN CORP-CLASS A APP 1.84 0.00 1.84 DOUYU INTERNATIONAL HOLD-ADR DOYU 1.82 4.87 -3.06 UBISOFT ENTERTAINMENT UBI 1.81 2.81 -1.00 KOEI TECMO HOLDINGS CO LTD 3635 1.72 0.00 1.72 KEYWORDS STUDIOS PLC KWS 1.59 2.55 -0.96 SEGA SAMMY HOLDINGS INC 6460 1.51 0.00 1.51 PEARL ABYSS CORP 263750 1.43 0.00 1.43 GUNGHO ONLINE ENTERTAINMENT 3765 1.42 0.00 1.42 DENA CO LTD 2432 1.42 2.87 -1.45 STILLFRONT GROUP AB SF 1.32 0.00 1.32 KAKAO GAMES CORP 293490 1.31 0.00 1.31 MIXI INC 2121 1.30 0.00 1.30 INTERNATIONAL GAMES SYSTEM C 3293 1.30 0.00 1.30 PARADOX INTERACTIVE AB PDX 1.25 0.00 1.25 GREE INC 3632 1.21 0.00 1.21 IGG INC 799 1.21 0.00 1.21 COLOPL INC 3668 1.21 0.00 1.21 NETMARBLE CORP 251270 1.20 0.00 1.20 COM2US CORP 78340 1.20 2.56 -1.36 TEAM17 GROUP PLC TM17 1.18 0.00 1.18 ROVIO ENTERTAINMENT OYJ ROVIO 1.16 0.00 1.16 FRONTIER DEVELOPMENTS PLC FDEV 1.10 0.00 1.10 WEMADE CO LTD 112040 1.06 0.00 1.06 WEBZEN INC 69080 0.91 0.00 0.91 WEMADE MAX CO LTD 101730 0.83 0.00 0.83 4 ACTIVISION BLIZZARD INC ATVI 0.00 6.59 -6.59 CORSAIR GAMING INC CRSR 0.00 5.55 -5.55 TENCENT HOLDINGS LTD 700 0.00 4.81 -4.81 HUYA INC-ADR HUYA 0.00 4.37 -4.37 NETEASE INC-ADR NTES 0.00 3.35 -3.35 SEA LTD-ADR SE 0.00 3.34 -3.34 SKILLZ INC SKLZ 0.00 3.14 -3.14 BILIBILI INC-SPONSORED ADR BILI 0.00 3.02 -3.02 LOGITECH INTERNATIONAL-REG LOGN 0.00 2.52 -2.52 SOOP CO LTD 67160 0.00 2.46 -2.46 MICRO-STAR INTERNATIONAL CO 2377 0.00 2.40 -2.40 NVIDIA CORP NVDA 0.00 2.34 -2.34 TURTLE BEACH CORP HEAR 0.00 2.19 -2.19 ENTHUSIAST GAMING HOLDINGS I EGLX 0.00 2.09 -2.09 ASUSTEK COMPUTER INC 2357 0.00 2.06 -2.06 GUILLEMOT CORPORATION GUI 0.00 0.74 -0.74 Summary of Changes (BETZ) Long Name Ticker Weight As of 10.2.23 Weight As of 9.29.23 Weight Change (%) DRAFTKINGS INC-CL A DKNG 12.86 6.58 6.28 FLUTTER ENTERTAINMENT PLC-DI FLTR 10.95 5.32 5.63 EVOLUTION AB EVO 7.38 3.51 3.87 BETSSON AB-B BETSB 5.51 4.03 1.48 CHURCHILL DOWNS INC CHDN 4.86 3.94 0.92 ENTAIN PLC ENT 4.26 4.66 -0.40 MGM RESORTS INTERNATIONAL MGM 4.23 3.47 0.77 LOTTERY CORP LTD/THE TLC 4.13 2.61 1.52 SPORTRADAR GROUP AG-A SRAD 4.02 2.48 1.54 KINDRED GROUP PLC KINDSDB 3.99 4.86 -0.87 PLAYTECH PLC PTEC 3.89 2.82 1.07 CAESARS ENTERTAINMENT INC CZR 3.68 4.00 -0.33 TABCORP HOLDINGS LTD TAH 3.60 5.34 -1.75 LA FRANCAISE DES JEUX SAEM FDJ 3.46 2.47 0.99 OPAP SA OPAP 2.83 2.79 0.04 SUPER GROUP SGHC LTD SGHC 2.66 1.91 0.75 LIGHT & WONDER INC LNW 2.43 3.14 -0.72 GENIUS SPORTS LTD GENI 1.95 3.23 -1.28 888 HOLDINGS PLC 888 1.95 2.98 -1.03 TOKYOTOKEIBA CO LTD 9672 1.53 3.01 -1.47 BETTER COLLECTIVE A/S BETCO 1.38 0.69 0.68 RUSH STREET INTERACTIVE INC RSI 1.36 2.05 -0.70 KAMBI GROUP PLC KAMBI 1.32 1.34 -0.03 PENN ENTERTAINMENT INC PENN 1.28 6.03 -4.75 5 BALLY'S CORP BALY 1.23 2.58 -1.35 NEOGAMES SA NGMS 1.02 2.08 -1.06 CATENA MEDIA PLC CTM 0.63 0.69 -0.06 POINTSBET HOLDINGS LTD PBH 0.55 1.04 -0.49 JUMBO INTERACTIVE LTD JIN 0.47 0.00 0.47 EVERI HOLDINGS INC EVRI 0.43 0.00 0.43 BETMAKERS TECHNOLOGY GROUP L BET 0.16 0.34 -0.18 POINTSBET HOLDINGS LTD-CW24 PBHAL 0.00 0.00 0.00 BETSSON AB-RED SH BETSILB 0.00 0.00 0.00 ARISTOCRAT LEISURE LTD ALL 0.00 3.00 -3.00 INTERNATIONAL GAME TECHNOLOG IGT 0.00 2.85 -2.85 BOYD GAMING CORP BYD 0.00 2.57 -2.57 GAMBLING.COM GROUP LTD GAMB 0.00 1.11 -1.11 BRAGG GAMING GROUP INC BRAG 0.00 0.16 -0.16 GAN LTD GAN 0.00 0.14 -0.14 INTRALOT S.A.-INTEGRATED LOT INLOT 0.00 0.13 -0.13 GAMING INNOVATION GROUP INC GIG 0.00 0.06 -0.06 6 Appendix B Morningstar® Sports Betting & iGaming Select Index Constituents (as of April 30, 2024) BETZ Holdings (as of April 30, 2024) Name Ticker Name Ticker Flutter Entertainment PLC FLUT Flutter Entertainment PLC FLTR DraftKings Inc DKNG DraftKings Inc DKNG Evolution AB EVO Evolution AB EVO Churchill Downs Inc CHDN Churchill Downs Inc CHDN Kindred Group PLC KINDSDB Kindred Group PLC KINDSDB Playtech Plc PTEC Playtech Plc PTEC Entain PLC ENT Entain PLC ENT Betsson AB BETSB Betsson AB BETSB La Francaise des Jeux SAEM FDJ La Francaise des Jeux SAEM FDJ Sportradar Group AG SRAD Sportradar Group AG SRAD Tabcorp Holdings Ltd TAH Tabcorp Holdings Ltd TAH MGM Resorts International MGM MGM Resorts International MGM Light & Wonder Inc LNW Light & Wonder Inc LNW OPAP SA OPAP OPAP SA OPAP Caesars Entertainment Inc CZR Caesars Entertainment Inc CZR Rush Street Interactive Inc RSI Rush Street Interactive Inc RSI Super Group SGHC Ltd SGHC Super Group SGHC Ltd SGHC Lottery Corp Ltd/The TLC Lottery Corp Ltd/The TLC Penn Entertainment Inc PENN Penn Entertainment Inc PENN Genius Sports Ltd GENI Genius Sports Ltd GENI Tokyotokeiba Co Ltd 9672 Tokyotokeiba Co Ltd 9672 Boyd Gaming Corp BYD Boyd Gaming Corp BYD Evoke PLC EVOK Evoke PLC 888 Better Collective A/S BETCO Better Collective A/S BETCO Bally's Corp BALY Bally's Corp BALY Kambi Group PLC KAMBI Kambi Group PLC KAMBI Gambling.com Group Ltd GAMB Gambling.com Group Ltd GAMB Jumbo Interactive Ltd JIN Jumbo Interactive Ltd JIN PointsBet Holdings Ltd PBH PointsBet Holdings Ltd PBH Everi Holdings Inc EVRI Everi Holdings Inc EVRI Intralot SA-Integrated Information Systems & Gaming Services INLOT Intralot SA-Integrated Information Systems & Gaming Services INLOT PointsBet Holdings Ltd -CW24 PBHAL First Am Gov Oblig-X FGXXX British Pound GBP 7