January 7, 2022
Joseph V. Amato
Chief Executive Officer and President
Neuberger Berman ETF Trust
c/o Neuberger Berman Investment Advisers LLC
1290 Avenue of the Americas
New York, New York 10104-0002
Re: Neuberger Berman ETF Trust (the Trust )
File Nos. 811-23761; 333-261613
Dear Mr. Amato:
We have reviewed the registration statement on Form N-1A filed December
9, 2021, with
the Commission on behalf of the Trust (the Registration Statement ) with
respect to an offering
of common shares of Neuberger Berman Carbon Transition Infrastructure ETF,
Neuberger
Berman Disrupters ETF and Neuberger Berman Next Generation Connected Consumer
ETF
(each a "Fund" and collectively the Funds ), each a series of the Trust.
Our comments are set
forth below. Please consider a comment made with respect to one section
applicable to similar
disclosure elsewhere in the Registration Statement. All capitalized terms not
otherwise defined
herein have the meaning given to them in the Registration Statement.
General
1. We note that portions of the Registration Statement are incomplete. We
may have
additional comments on such portions when you complete them in a
pre-effective
amendment, on disclosures made in response to this letter, on information
supplied
supplementally, or on exhibits added in any amendments.
Prospectus
Fund Summaries
Comments Applicable to the Funds:
2. As the Funds are new, in the Expense Example for each Fund please
complete only the 1-
and 3-year period portions of the Example and delete the reference to the
5 and 10 year
periods. See, Item 3, Instruction 6(b).
Joseph V. Amato
Page 2
3. Each Fund discloses convertible securities as a principal investment
strategy. Please
confirm supplementally whether the Funds intend to invest in contingent
convertible
securities ( CoCos ) and, if so, the anticipated amount of the
investment. If CoCos will
be a principal investment strategy of the Funds, please describe them and
add appropriate
risk disclosure.
4. The Neuberger Berman Carbon Transition Infrastructure ETF and the
Neuberger Berman
Next Generation Connected Consumer ETF disclose investment in Chinese
companies as
a principal investment strategy. If the Funds will facilitate these
investments through
exchange-listed companies that use variable interest entity structures
(VIEs), please
disclose so. Such disclosure should provide, at a minimum, a brief
explanation of what a
VIE is and the extent to which a Fund invests in issuers that use them,
the material risks
associated with such investments, including legality concerns, and the
impact on the Fund
if the risk occurs. See, e.g., Chair Gary Gensler, Statement on
Investment Protection
Related to Recent Developments in China (July 30, 2021).
5. Each Fund s Principal Investment Strategies contains the following
disclosure:
The Portfolio Managers systematically and explicitly include material
Environmental,
Social and Governance (ESG) risks and opportunities in investment
analysis and
investment decisions for all securities. The Portfolio Managers
conduct ongoing
proprietary ESG research, including proactive engagement on ESG
issues. The
Portfolio Managers assess all securities in relation to their
exposure to and the
management of material ESG risks.
This disclosure is provided with no context or explanation of relevance
to the Funds and
their investment strategies. It is unclear what ESG risks and
opportunities the Portfolio
Managers are including in their analysis when determining what securities
to buy to
achieve the Fund s objective. In addition, as written, this disclosure
is too generic to
inform investors about how the Portfolio Managers, in making assessments
with respect
to material ESG risks, actually measure and analyze companies. Please
respond in
accordance with the following:
a. If ESG considerations are a part of a Fund s principal strategy,
please revise this
disclosure to clarify how these considerations are applied
specifically to the Fund and
the data and metrics the Portfolio Managers use to evaluate a company
s ESG
desirability. In addition, please explain what ESG risks and
opportunities are and
how they are considered in the context of the Fund s investment
focus.
b. If ESG evaluation of potential investments is not a principal strategy
of the Fund,
please delete this disclosure as its inclusion in the Prospectus is
potentially
misleading. See Gen. Instr. C.1.(c) (responses to the Items in Form
N-1A should
include only as much information as is necessary to enable an average
or typical
investor to understand the particular characteristics of the Fund).
Joseph V. Amato
Page 3
6. In Principal Investment Risks, each Fund s risks are presented in
alphabetical order.
Please order the risks to prioritize the risks that are most likely to
adversely affect the
Fund s net asset value, yield and total return. Please note that after
listing the most
significant risks to the Fund, the remaining risks may be alphabetized.
See ADI 2019-08
- Improving Principal Risks Disclosure.
7. The Funds each disclose investment in other investment companies as a
principal
investment strategy. If expenses related to these investments are greater
than one basis
point, please include a separate line item for acquired fund fees and
expenses in the
Fund s fee table.
8. In the section Principal Investment Risks, Recent Market Conditions for
each Fund, the
disclosure includes a paragraph entitled Climate Change. The
paragraph describes the
general business and property risks associated with global climate
change, but also states
the specific risk of loss from climate change affecting the value of
coastal properties
and the value of mortgage-backed securities, the bonds of
municipalities that depend on
tax or other revenues and tourist dollars generated by affected
properties, and insurers of
the property and/or of corporate, municipal or mortgage-backed
securities. None of
these investments are principal strategies of the Funds. Please move this
disclosure to the
SAI or delete.
Neuberger Berman Carbon Transition Infrastructure ETF
Principal Investment Strategies
9. On page 2, in the first paragraph of this section, the disclosure states:
Under normal market conditions, the Fund will invest at least 80% of its
total assets in
companies that are relevant to the theme of investing in Carbon
Transition
Infrastructure. The Fund considers Carbon Transition Infrastructure
companies to be
those companies which have exposure to infrastructure that will be
required to, or will
enable other entities to, reduce greenhouse gas emissions.
Regarding this disclosure, please address the following comments:
a. The disclosure in Carbon Transition Infrastructure Risk on page 3
states Carbon
Transition Infrastructure companies may be more volatile than
companies operating
in more established industries [emphasis added]. As Carbon
Transition
Infrastructure is an industry and therefore subject to the
requirements of rule 35d-1,
please remove the phrase relevant to the theme of investing in
from the Fund s 80%
test. Please revise the test to disclose that the Fund will invest at
least 80% of its net
assets (plus borrowings for investment purposes) or of its total
assets in Carbon
Transition Infrastructure companies.
Joseph V. Amato
Page 4
b. Please revise the definition of Carbon Transition Infrastructure
companies to indicate
that these are companies with principal business activities
economically tied to
infrastructure, not merely exposed to infrastructure.
c. Please disclose the Fund s criteria for determining a company
will be required to, or
will enable other entities to, reduce greenhouse gas emissions. In
this regard, the
following sentence in this paragraph states the Portfolio Managers
seek to invest in
companies that they identify as focused on [various low carbon
activities]. In the
disclosure, please define focused on objectively. For example,
would focused on
be equivalent to at least 50% of a company s revenue or profit? Or
equivalent to a
company devoting 50% of its assets to reducing greenhouse gas
emissions?
d. Please provide us with a number of examples of companies that would
meet your
revised 80% policy, along with a brief explanation why.
10. The last sentence of the first paragraph of this section refers to
transition engagement
opportunities. The disclosure states these are issuers along a
decarbonization pathway
but for which lower carbon solutions may currently be a small portion
of their business
model. It appears these will include issuers with fossil fuel
exposure referenced in the
second paragraph. Will these issuers be included in the Fund s 80%
test? Please clarify
in the disclosure.
Regarding the disclosure that the Fund may invest in companies that
are transitioning
their business models, products or services along a decarbonization
pathway , please
disclose how the Portfolio Managers determine a company is transitioning
and evaluate
the company s commitment to transitioning.
11. On page 2, the last sentence of the second paragraph states The
sectors in which Carbon
Transition Infrastructure companies are found may change in the future,
and the Fund s
focus may change with it [emphasis added]. Please clarify what the
Fund s focus may
change with it means.
12. On page 2, disclosure in the first sentence of the fifth paragraph
states Portfolio Managers
seek to identify companies that demonstrate certain economic
characteristics related to
the Carbon Transition Infrastructure [emphasis added]. Similar to
comment 9.c. above,
please define the term related to objectively if the Fund
considers these characteristics
in determining a company meets the requirements of its 80% test.
13. On page 2, in the second sentence, the disclosure indicates that in
determining Fund
investments, Portfolio Managers will use a proprietary net zero
alignment methodology
that considers available company disclosed data, third party data,
sector-specific
considerations as well as qualitative analysis. Please clarify
what you mean by
proprietary net zero alignment methodology and the timeline associated
with achieving
net zero. In addition, disclose here the types of analyses, data, and
research the Portfolio
Managers will consider to support investment decisions. Please also
address any
portfolio construction parameters the Fund anticipates using.
Joseph V. Amato
Page 5
14. On page 2, in the penultimate paragraph of this section, the disclosure
describes when the
Fund will exit a position. The disclosure refers to the positive
realization of a catalyst,
the absence of a catalyst and if a catalyst fails to develop. If there
are particular catalysts
that determine the Fund s investments, disclose them in this section.
Please also consider
whether Catalyst Risk as disclosed with respect to the Disrupters
ETF is applicable
here.
Principal Investment Risks
15. Please disclose the risks associated with the Fund s portfolio being
concentrated in a
group of industries.
16. On page 3, the disclosure includes Dividend Risk . As the objective
of the Fund is long
term capital appreciation, please consider whether this is a principal
risk of the Fund.
Neuberger Berman Disrupters ETF
Principal Investment Strategy
17. On page 2, in the second paragraph, the disclosure describes the
Portfolio Managers
fundamental, bottom-up securities analysis used to identify those
companies well-
positioned to deliver investment outperformance relative to the Fund s
benchmark. The
disclosure states the Portfolio Managers seek companies with economic
characteristics
such as proven management track records, market leaders and strong
historic valuations
and traditional metrics. This analysis seems inconsistent with the
speculative nature of
disrupters described in the first paragraph. Please reconcile the
disclosure. Please also
disclose how the Portfolio Managers determine investments in disrupters.
Please disclose
the types of analyses, data, and/or research the Portfolio Managers will
consider to
support investment decisions, as well as any portfolio construction
parameters the Fund
anticipates using.
18. On page 11, in the third paragraph, the disclosure states that the Fund
will concentrate in
companies operating in one or more industries within the health care
equipment and
supplies, semiconductors, software and interactive media and services
groups of
industries. This statement appears to reserve discretion as to when
or whether the Fund
will concentrate. We do not believe this level of discretion is
appropriate. Please revise
to remove this discretion or to clearly indicate when and under what
conditions the Fund
will be concentrated in the disclosed industries.
Principal Investment Risks
19. On page 11, the disclosure includes Catalyst Risk and states
Investing in companies in
anticipation of a catalyst carries the risk that the catalyst may not
happen as anticipated,
or the market may react to the catalyst differently than expected.
Please disclose in
Joseph V. Amato
Page 6
Principal Investment Strategies the catalysts the Fund anticipates
occurring and how they
impact the Fund s investment decisions.
20. Please disclose the risks associated with the concentrated nature of the
Fund s portfolio.
21. On page 12, in Disrupter Risk, the disclosure states that the Fund
will invest in
disruptive technologies or companies applying such technologies
[emphasis added], and
that [i]n some cases, it may invest at early and perhaps speculative
stages of
development . Will the Fund invest in early-stage companies, such
as pre-revenue,
pre-IPO or those funded by venture capital? If so, please disclose so in
Principal
Investment Strategies and disclose the risks associated with investment
in these types of
companies and early stage companies in general.
Neuberger Berman Next Generation Connected Consumer ETF
Principal Investment Strategies
22. On page 19, the disclosure in the second full paragraph describes the
bottom-up
securities analysis the Portfolio Managers use in an effort to
identify those NextGen
Consumer companies that they believe are well-positioned to benefit
from new business
models, products or services related to the NextGen Consumer.
However, it is unclear
how you determine a company is well positioned or has significant
growth potential
related to connectivity-based consumerism. Please disclose how the
Fund determines a
company is a NextGen Consumer company and describe the analyses, data,
and/or
research the Portfolio Managers will consider to support investment
decisions, as well as
any portfolio construction parameters the Fund anticipates using.
Principal Investment Risks
23. On page 22, the disclosure in the risk factor Next Generation
Connectivity and Emerging
Technologies Investment Risk is essentially strategy and should be
disclosed in Principal
Investment Strategies. Please disclose here the risks associated with
investing with a
Generation Y/Z focus and in emerging technologies, including those
associated with 5G.
In addition, the disclosure in this risk factor states the Fund's
holdings will include
equity securities of operating companies that focus on or have exposure
to a wide variety
of industries, and also that The economic fortunes of the
companies held by the Fund
will be significantly tied to next generation connectivity technologies.
Please either
reconcile these disclosures which seem inconsistent, or otherwise
clarify their meaning
and the nature of the Fund s investments.
Descriptions of Certain Practices and Security Types
24. Please review the requirements of Item 9 and revise as needed to state
the Funds
investment objectives and to describe how the Funds intend to achieve
the objectives.
Joseph V. Amato
Page 7
Information about Additional Risks and Other Practices
25. On page 38, the disclosure states A Fund may change its goal without
shareholder
approval, although none currently intend to do so. If the Fund will
provide shareholders
notice of this change, please disclose so.
Management of the Funds
26. At the bottom of page 38, the disclosure states A discussion
regarding the basis for the
approval of the Funds investment advisory agreements will be
available in the Funds
initial shareholder report. Please specify the Fund s annual or
semi-annual report to
shareholders and provide the period of the report. See, Item
10(a)(1)(iii).
Distribution Plan
27. Please confirm to us the Funds will not impose 12b-1 fees for at least
one year following
effectiveness of the Registration Statement. If 12b-1 fees will be
imposed within the
year, please include a separate line item indicating the 12b-1 fees in
the relevant Fund s
fee table.
Appendix Related Performance Information of Similar Accounts (page 47)
28. Please confirm to us that the Composite includes all similar accounts to
the Fund.
29. Please confirm that performance of the Composite is presented net of all
actual fees and
expenses on the accounts, including sales loads.
30. Please represent to us that the Fund has the records necessary to
support the calculation
of the performance as required by rule 204-2(a)(16) under the Investment
Advisers Act of
1940.
Statement of Additional Information
31. In the fifth paragraph on page 1, the disclosure states The Trust
reserves the right to
permit or require that creations and redemptions of Shares be effected
entirely in cash.
If creation units are purchased or redeemed primarily with cash, please
disclose in the
prospectus that purchases and redemptions of creation units primarily
with cash, rather
than through in-kind delivery of portfolio securities, may cause the
Fund to incur certain
costs, including brokerage costs or taxable gains or losses that it
might not have incurred
if it had made redemption in-kind. Please also disclose these costs
could be imposed on
the Fund, and to the extent they are not offset by a transaction fee
payable by an
authorized participant, could decrease the Fund s net asset value.
32. On page 3, in Investment Policies and Limitations, the disclosure in
each Fund s policy
on Industry Concentration states that the concentration limitation does
not apply to
Joseph V. Amato
Page 8
securities of other investment companies. Please note that the Fund and
the Manager
may not ignore the investments of affiliated and unaffiliated underlying
investment
companies when determining whether the Fund is in compliance with its
concentration
policies. Please add disclosure to clarify that the Fund will consider
the investments of
its underlying investment companies when determining the Fund s
compliance with its
concentration policies.
33. On page 4, disclosure (in brackets) states:
For purposes of the limitation on commodities, the restriction does
not prevent a Fund
from investing in a wholly owned subsidiary, thereby gaining
exposure to the
investment returns of commodities markets within the limitations of
federal income
tax requirements, or from investing in commodity-linked derivative
instruments.
Regarding this disclosure, please inform us if the Funds anticipate
investing in a wholly-
owned subsidiary considered to be a controlled foreign corporation. If
so, we will have
further comments. In addition, regarding any investment in
commodity-linked derivative
instruments, please confirm to us the Funds will not invest in any
crypto currency,
including Bitcoin, or any instruments providing exposure to a crypto
currency.
34. On page 107, in Acceptance of Orders for, and Issuance of, Creation
Units, please delete
the statement that the Fund reserves the absolute right to reject or
revoke acceptance of a
creation order, including if (iv) acceptance of the Deposit Securities
would have certain
adverse tax consequences to the Fund; [and] (vi) acceptance of a Fund
Deposit would,
in the discretion of the Fund or NBIA, have an adverse effect on the
Fund or the rights of
Beneficial Owners. We recognize that this disclosure may be derived
from statements
related to exemptive relief obtained by Trust. However, in connection
with the recent
adoption of rule 6c-11, the Commission stated its belief that an ETF
generally may
suspend the issuance of creation units only for a limited time and only
due to
extraordinary circumstances, such as when the markets on which the ETF
s portfolio
holdings are traded are closed for a limited period of time. See,
Exchange-Traded
Funds, Release No. 33-10515, at pp.67-68 (June 28, 2018).
* * * * * * * *
Please respond to our comments above in an amendment to the Registration
Statement.
Where no change will be made in response to a comment, please note that in a
cover letter or
separate correspondence and briefly state the basis for your position.
We should also advise you that the Division of Enforcement has access to
all information
you provide to the staff of the Division of Investment Management in connection
with our
review of your filing, including information provided in response to our
comments.
We will consider a written request for acceleration of the effective
date of the
Registration Statement as confirmation of the fact that those requesting
acceleration are aware of
Joseph V. Amato
Page 9
their respective responsibilities. If all comments on the Registration
Statement have been
resolved, we will act on the request and grant acceleration of the effective
date, pursuant to
delegated authority.
Please call me at (202) 551-6779 with any questions or concerns regarding
these matters
you would like to discuss.
Sincerely,
/x/ Karen Rossotto
Karen Rossotto
Senior Counsel
cc: Stacy L. Fuller, Esq. and Lori L. Schneider, Esq., K&L Gates LLP
Jay Williamson, Securities and Exchange Commission