Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 Telephone 215-564-8000 Fax 215-564-8120 www.stradley.com |
Mark A. Sheehan, Esq.
(215) 564-8027
msheehan@stradley.com
August 28, 2020
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549-9303
Attention: | Raymond Be, Esq. | ||
Senior Counsel | |||
Re: | Global X Funds | ||
File No. 333-151713, 811-22209 |
Dear Mr. Be:
On behalf of Global X Funds (the “Registrant” or the “Trust”), and its series, the Global X S&P 500® Covered Call & Growth ETF (the “Fund”), included in Post-Effective Amendment No. 602 (the “Amendment”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on July 15, 2020 with regard to the Amendment. The Amendment was filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 29, 2020, pursuant to the Investment Company Act of 1940, as amended, and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to each comment. The responses will be incorporated into a post-effective amendment filing to the Registration Statement to be made pursuant to Rule 485(b) under the Securities Act. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Amendment.
U.S. Securities and Exchange Commission
Attention: Raymond Be, Esq.
August 28, 2020
Page 2
PROSPECTUS | |
SUMMARY OF PRINCIPAL RISKS | |
1. | Comment: With regard to the “Market Risk” disclosure reference to certain market events leading to “higher levels of Fund redemptions” please clarify what the redemptions might be in the context of an exchange-traded fund. |
Response: The Registrant has revised its disclosure as follows: | |
SUMMARY OF PRINCIPAL RISKS | |
Market Risk: Turbulence in the financial markets and reduced liquidity may negatively affect issuers, which could have an adverse effect on the Fund. If the securities held by the Fund experience poor liquidity, the Fund may be unable to transact at advantageous times or prices, which may decrease the Fund’s returns. In addition, there is a risk that policy changes by central governments and governmental agencies, including the Federal Reserve or European Central Bank, which could include increasing interest rates, could cause increased volatility in financial markets and lead to higher levels of Fund redemptions from Authorized Participants, which could have a negative impact on the Fund. Furthermore, local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, or other events could have a significant impact on the Fund and its investments and trading of its Shares. The Fund’s NAV could decline over short periods due to short-term market movements and over longer periods during market downturns. | |
A FURTHER DISCUSSION OF PRINCIPAL RISKS | |
Market Risk | |
Market risk is the risk that the value of the securities in which the Fund invests may go up or down in response to the prospects of individual issuers and/or general economic conditions. Turbulence in the financial markets and reduced market liquidity may negatively affect issuers, which could have an adverse effect on the Fund. If the securities held by the Fund experience poor liquidity, the Fund may be unable to transact at advantageous times or prices, which may decrease the Fund’s returns. In addition, there is a risk that policy changes by central governments and governmental agencies, including the Federal Reserve or European Central Bank, which could include increasing interest rates, could cause increased volatility in financial markets and lead to higher levels of Fund redemptions from Authorized Participants, which could have a negative impact on the Fund. Furthermore, local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, or other events could have a significant impact on the Fund and its investments and trading of its Shares. The Fund’s NAV could decline over short periods due to short-term market movements and over longer periods during market downturns. |
U.S. Securities and Exchange Commission
Attention: Raymond Be, Esq.
August 28, 2020
Page 3
2. | Comment: Please harmonize the “Passive Investment Risks – Management Risk” disclosure which states that “The Fund will not fully replicate its Underlying Index,” with the Principal Investment Strategies reference that states “The Fund generally will use a replication strategy.” |
Response: The Registrant has revised this disclosure to note that, for the reasons articulated in such risk disclosure, the Fund may not fully replicate its Underlying Index. | |
3. | Comment: With regard to the “Turnover Risk” disclosure, please supplementally explain how the Fund will be subject to turnover risk. |
Response: The Registrant notes that the Fund will purchase, or “roll”, options contracts on a monthly basis. Given the frequency of such transactions, the Fund may be subject to a greater risk of higher transaction costs. |
Please do not hesitate to contact me at (215) 564-8027 if you have any questions or wish to discuss any of the responses presented above.
Respectfully submitted, | ||||||
/s/ Mark A. Sheehan | ||||||
Mark A. Sheehan, Esquire |
cc: | John Belanger, Esquire |
Senior Vice President, Head of Product Management | |
Global X Management Company, LLC | |
Eric S. Purple, Esquire | |
Michael E. Schapiro, Esquire |