SecProbe.io

CORRESP
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filename1.htm

June 30,
2023

Ms.
Alison T. White

U.S.
Securities and Exchange Commission

100
F Street, NE

Washington,
DC 20549

 Re: Themes
ETF Trust, File Nos. 333-271700; 811-23872

Dear
Ms. White:

This
correspondence responds to comments provided by the staff of the U.S. Securities and Exchange Commission (the “Staff”) pursuant
to its review of the registration statement for Themes ETF Trust (the “Registrant” or the “Trust”), with respect
to Themes Airlines ETF, Themes China Technology ETF, Themes Cloud Computing ETF, Themes Cybersecurity ETF, Themes European Luxury ETF,
Themes Future of Farming ETF, Themes Generative Artificial Intelligence ETF, Themes Global Systemically Important Banks ETF, Themes Gold
Miners ETF, Themes Industry 4.0 ETF, Themes Junior Gold Miners ETF, Themes Natural Monopoly ETF, Themes Renewable Energy ETF, Themes
Robotics & Automation ETF, Themes Semiconductors ETF, Themes US Cash Flow Champions ETF, Themes US Internet ETF, Themes US R&D
Champions ETF, Themes Silver Miners ETF, Themes Solar Energy ETF, Themes US Small Cap Cash Flow Champions ETF, Themes Wind Energy ETF
(the “Funds”), filed on Form N-1A with the Securities and Exchange Commission on May 5, 2023. For your convenience,
the comments have been reproduced with responses following each comment. The captions used below correspond to the captions the Trust
uses in the registration statement. All capitalized terms not otherwise defined herein have the meaning given to them in the registration
statement.

PROSPECTUS

General

 1. In
                                            order to comply with the requirements of Investment Company Act Rule 35d-1 (“Rule 35d-1”
                                            or the “Names Rule”), please disclose that each indexed ETF other than the Themes
                                            Natural Monopoly ETF will have a policy under normal circumstances to invest at least 80%
                                            of net assets plus the amount of any borrowings for investment purposes in the investment
                                            or industry suggested by its name. Alternatively, explain to us why you believe that the
                                            existing policy of investing at least 80% in each fund’s respective Index satisfies
                                            this requirement. Please ensure revised disclosure addresses the objective criteria used
                                            to determine an investment may be used to satisfy names rule requirements.

Response:
Section 35(d) of the 1940 Act prohibits a registered investment company from adopting a name that includes words that the SEC finds
are materially deceptive or misleading. The SEC adopted Rule 35d-1 in an effort to protect investors against misleading or deceptive
fund names. Rule 35d-1 provides, in part, that when a fund’s name suggests that it focuses its investments in a particular
industry, the fund must adopt a policy to invest, under normal market conditions, at least 80% of the fund’s net assts plus the
amount of any borrowings for investment purposes in the industry suggested by its name. As disclosed, each Fund (as applicable) will
invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in securities in its respective Index.
Each Index provides exposure to companies suggested by name of the corresponding Fund, as determined by each Fund’s independent
third-party Index Provider. The objective criteria used by the Index Provider in selecting Index Components is clearly set forth in the
prospectus. Each Fund’s underlying Index is composed entirely of securities that have been determined by the respective Index Provider
to be consistent with the types of investments suggested by each Fund’s name/theme (e.g., airlines, semiconductors and US
internet securities). In addition, the Staff has stated that the key issue in determining whether a fund name is deceptive or misleading
is “whether the name would lead a reasonable investor to conclude that the company invests in a manner that is inconsistent with
the company’s intended investments or the risks of those investments.”1 Therefore, because each Fund has a policy
to invest at least 80% of its assets plus the amount of any borrowings for investment purposes in the securities included in its underlying
Index, the Registrant submits that the Funds satisfy the requirements of the Names Rule. Furthermore, the Registrant believes the current
disclosure provides investors with a reasonable and industry consistent description of the types of companies a Fund will invest in in
order to satisfy the 80% requirement of the Names Rule. In addition, this requirement aligns with the expectation for index funds put
forth by the SEC, which has said that such funds “generally would be expected to invest more than 80% of their assets in investments
connoted by the applicable index.”2

The
Registrant will continuously monitor each Fund’s portfolio for compliance with this policy. The Registrant further discloses that
shareholders will be provided with sixty days’ notice in the manner prescribed by the Names Rule before any change in a Fund’s
policy to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in securities included in its
Index.

In
addition, each Fund will fully disclose its entire portfolio on its public website daily which will provide investors with real time
portfolio holdings information. The full transparency of the Funds’ holdings will: (i) permit investors and industry analysts to
easily monitor each Fund’s activities and confirm (if they wish) that a Fund’s holdings are consistent with its name, and
(ii) create a strong incentive for each Fund to make investments that are consistent with its name to provide investors with greater
certainty and encourage asset growth.

The
objective criteria used by the Index Providers to determine an investment may be used to satisfy Names Rule requirements are
currently disclosed in the “Principal Investment Strategies of the Fund” section of each Fund’s summary
prospectus. The Registrant notes that, as a general matter, a fund “may use any reasonable definition of the terms used in its
name in discussing its investment objectives and strategies in its prospectus.”3 For further edification, the disclosure
provided in response to Item 9 of Form N-1A has been revised to include the following:

1 Investment
Company Names; SEC Rel. No. IC-24828 (January 17, 2001) at text accompanying n.44.

2 Investment
Company Names; SEC Rel. No. IC-24828 (January 17, 2001)

3 Id.
at n.43.

    2

“As
noted in the summary sections of the prospectus, the Index Providers utilize industry classifications as determined by the FactSet Revere
Business Industry Classification System (“RBICS”). FactSet is a third-party provider of industry classifications, widely
adopted by the financial services industry, that is wholly independent of and in no way related to the Registrant, the Adviser or the
Funds’ Index Providers. RBICS employs a comprehensive structured taxonomy designed to offer precise classification of global companies
and their individual business units. The Funds’ Index Providers rely on one or both of these RBICS products in selecting Index
Components:

 ● RBICS
                                            Focus offers a single-sector mapping of approximately 48,000 of the most liquid and publicly-traded
                                            companies based on their primary lines of business; it uses revenues as the key factor in
                                            determining a company’s primary line of business, by mapping a company to the lowest-level
                                            sector from which it derives 50% or more of its revenues.

 ● RBICS
                                            with Revenue offers a multi-sector mapping of approximately 48,000 of the most liquid and
                                            publicly-traded companies; the revenue percentages associated to each reported business segment
                                            are standardized into the most granular sectors of the RBICS taxonomy.”

 2. For
                                            each Fund, please provide us with a copy of the Index Methodology White Paper and a list
                                            of the top ten holdings. The top ten holdings list should include the company name, its percentage
                                            of the Index, and a brief explanation of the objective criteria supporting its inclusion
                                            in the Index.

Response:
The Registrant has provided under separate cover a copy of the Index Methodology White Paper and a list of the top ten holdings for each
index, and as it relates to the top ten holdings, each company name, its percentage of the index, and a brief explanation of the objective
criteria supporting its inclusion in the index.

 3. For
                                            each Index that uses the ARTIS natural language processing system in connection with its
                                            strategy, please include disclosure in Item 9 explaining how the system was developed,
                                            validated, and how it is monitored over time to ensure its continued relevance. Address the
                                            types of data and languages it processes and any filters in place to ensure the veracity
                                            of the data feed. Explain how it is used to rank investments and the potential impact re-
                                            rankings may have on portfolio turnover. Lastly, please include tailored risk disclosure
                                            addressing potential risks associated with relying on an NLP system to select or rank potential
                                            investments.

Response:
The Registrant has provided additional information in response to Item 9 of Form N-1A on Solactive’s Algorithmic Theme Identification
System (“ARTIS”) as requested. In addition, tailored risk disclosure has been added as it relates to the use of a natural
language processing (NLP) model.

Themes
Airlines ETF

 4. Please
                                            clarify what it means for a company to be part of the Solactive Global Benchmark Series (“GBS”)
                                            index universe of the Solactive GBS Developed Markets All Cap USD Index. Is the GBS index
                                            universe a subset of the Solactive GBS Developed Markets All Cap USD Index or vice versa?
                                            (page 4). In this regard please consider whether there is a clearer, more direct and informative
                                            way to disclose the index’ investment universe. This comment also applies to the Themes
                                            China Technology ETF (page 12), Themes Cloud Computing ETF (page 22), Themes Cybersecurity
                                            ETF (page 32), Themes Renewable Energy ETF (page 113) and the Themes Semiconductors ETF (page
                                            132).

Response:
The Registrant has revised the disclosure accordingly for each of the Funds noted in the comment.

    3

 5. In
                                            the sentence stating that the Solactive GBS Developed Markets All Cap USD Index “...intends
                                            to track the performance of the all cap covering approximately the largest 100% of the free-float
                                            market capitalization in Developed Markets”, please to clarify what “all cap”
                                            refers. This comment also applies to the Themes China Technology ETF (page 32) and Themes
                                            Renewable Energy ETF (page 113).

Response:
The Registrant has revised the disclosure accordingly for each of the Funds noted in the comment.

 6. Please
                                            tailor your Geographic Risk to address the regions or countries investors will be principally
                                            exposed to, directly or indirectly, as a result of the Fund’s investments in airline
                                            companies. Revised disclosure should address material issues in the region or country and
                                            how such issues could impact the companies the Fund invests in. This comment should be considered
                                            across all of the Funds included in your filing. Please revise as appropriate.

Response:
The Registrant has revised the disclosure as appropriate.

 7. Please
                                            explain the relevance of the Consumer Discretionary Risk disclosure or remove it.

Response:
The disclosure has been removed.

Themes
China Technology ETF

 8. Please
                                            tell us why the reference to “are primarily engaged in innovative business activities”
                                            as referenced in your Investment Objective is appropriate in light of the Index selection
                                            criteria and Fund’s strategy.

Response:
The reference to “are primarily engaged in innovative business activities” in the Investment Objective has been removed.

 9. We
                                            note your Index makes its selections based on “free float market capitalization.”
                                            Please explain any unanticipated impacts of this for investors. It is unclear, for example,
                                            whether any well-known Chinese technology companies would be excluded or have lower weights
                                            as a result of the “free float” qualifier. Also, please clarify whether any of
                                            the investments are in sensitive sectors where foreign ownership is or may be prohibited
                                            or limited. If so revise to clarify your strategy and risk disclosure.

Response:
The Registrant has revised the disclosure accordingly.

 10. In
                                            the sentence stating that “[t]his is an iterative process until the maximum individual
                                            of all Index Components is 10%,” please clarify to what “individual” refers.
                                            (page 12)

Response:
The Registrant has revised the disclosure accordingly.

 11. Please
                                            explain in the filing what an “on-shore” vs. an “off-shore” Chinese
                                            company is. (page 14)

Response:
The Registrant has revised the disclosure accordingly.

    4

 12. Please
                                            clarify what the phrase “either exchange” refers to in the first sentence of
                                            the last paragraph on page 14.

Response:
The Registrant has revised the disclosure accordingly.

 13. Please
                                            consider adding risk disclosure regarding the Holding Foreign Companies Accountable Act (HFCAA)
                                            and forced or voluntary de-listing of China-based companies. (page 15)

Response:
The Registrant has revised the disclosure to address the risks related to the Holding Foreign Companies Accountable Act (HFCAA) and forced
or voluntary de-listing of China-based companies

The