Eq Advisors Trust CORRESPCorrespondence with SEC

April 8, 2020 

VIA EDGAR AND E-MAIL 

Dear Ms. Bentzinger: 

On behalf of EQ Advisors Trust (the “Trust”), set forth below are comments that you provided orally on March 23, 2020, concerning Post-Effective Amendment No. 144 to the Trust’s Registration Statement on Form N-1A (the “Post-Effective Amendment”).  The Post-Effective Amendment was filed with the U.S. Securities and Exchange Commission on February 7, 2020, pursuant to the Securities Act of 1933, as amended, and Rule 485(a) of Regulation C thereunder, and pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), and the regulations thereunder.  Your comments are set forth in italics and are followed by the Trust’s responses.  Unless otherwise noted, defined terms have the same meanings as in the Post-Effective Amendment.  

Response:  The Trust confirms that it will update the Portfolios’ names on EDGAR.  

Response:  The Trust has revised the disclosure in “Recent Market Conditions Risk” to discuss the impact of the COVID-19 pandemic, including that its impacts have caused significant volatility and declines in the global financial markets, and that the prices and liquidity of the securities in which the Portfolios invest could be further adversely impacted, which in turn could negatively impact a Portfolio’s performance and cause losses on an investment in the Portfolio. 

The Trust has also revised the “Redemption Risk” risk factor in the summary and statutory prospectuses by adding the following language: “In addition, significant securities market disruptions related to outbreaks of the coronavirus disease (COVID-19) have led to dislocation in the market for a variety of fixed income securities (including, without limitation, commercial paper, corporate debt securities, certificates of deposit, asset-backed debt securities and municipal obligations), which has decreased liquidity and sharply reduced returns.” 

Response:  The Portfolios that include “Geographic Concentration Risk” as a principal investment risk (EQ/MFS Mid Cap Focused Growth Portfolio, EQ/Wellington Energy Portfolio, and EQ/MFS Technology II Portfolio) have investment policies providing broad flexibility to invest a portion of their assets in foreign securities.  However, none of these Portfolios has an investment policy requiring them to focus those investments in one or more specific non-US regions as contemplated by the staff’s comment.  For these Portfolios, geographic allocation is a result of the then-current investment opportunities identified by the Portfolio’s portfolio managers pursuant to the principal investment strategies identified in the Portfolio’s prospectus. Accordingly, each such Portfolio’s investments in a particular region will vary over time depending on the portfolio managers’ then-current view of the investment opportunities presented by such region. Therefore, with respect to each such Portfolio, the Trust believes that the current disclosure is consistent with, and appropriately tailored to, the broad investment mandate with respect to investments in foreign securities, and that no additional disclosure in the principal strategy section is necessary.  The Trust also notes that disclosure regarding the risks associated with investments in specific geographic regions is included in the Portfolios’ SAI. 

Response:  Each Portfolio that has a principal investment strategy to focus its investments in a particular industry or group of industries describes the particular industry or group of industries in its summary prospectus and discloses the principal risks associated with investments in the particular industry or group of industries. Each such Portfolio also includes general “Sector Risk” as a principal risk. Each Portfolio that does not have a principal investment strategy to focus investments in, or concentrate investments in, any particular industry or sector, but that, from time to time, based on market or economic conditions, may have significant positions in one or more sectors of the market, includes general “Sector Risk” disclosure that is introduced by a statement to that effect. For each such Portfolio, industry and sector allocation is a result of the then-current investment opportunities identified by the Portfolio’s portfolio managers pursuant to the principal investment strategies identified in the Portfolio’s prospectus. Accordingly, each such Portfolio’s investments in an industry or sector will vary over time depending on the portfolio managers’ then-current view of the investment opportunities presented by such industry or sector. Therefore, with respect to each such Portfolio, the Trust believes that the current disclosure is consistent with, and appropriately tailored to, the broad investment mandate of the Portfolio, and that no additional disclosure in the principal strategy section is necessary. 

Response: The Trust has revised the discussion as follows: “The Adviser may be reimbursed the amount of any such payments or waivers in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and the combination of the Portfolio’s expense ratio, and such reimbursements after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower.”  The Trust has also added the same disclosure to the footnote that describes the expense waiver in the applicable fee tables. 

Response:  The Trust respectfully submits that its current disclosure describes how it will invest its assets in investments that are tied economically to a number of different countries around the world. The Trust notes that Rule 35d-1 under the 1940 Act does not apply to the term “global.” The adopting release for Rule 35d-1 (Investment Co. Act Rel. No. 24828, at n. 42 (Jan. 17, 2001) (the “Names Rule Adopting Release”)) states that the term “global” connotes “diversification among investments in a number of different countries throughout the world.” While the Names Rule Adopting Release states that use of the term “global” in a fund’s name is not subject to Rule 35d-1, the staff has indicated that it would expect that funds using “global” in their names “will invest [their] assets in investments that are tied economically to a number of countries throughout the world.” 

The Trust notes that, in response to questions from the Investment Company Institute (“ICI”) concerning the application of Rule 35d-1 to funds with “global” in their names, the ICI reported to its members in June 2012 that the staff believes that one way to satisfy the requirement that a “global” fund’s name connotes investments throughout the world is for the fund to state in its prospectus that it will invest in at least three different countries and invest at least 40% of its assets outside the United States (30% in unfavorable market conditions) (the “40% Test”). According to the ICI notice, the staff indicated that the 40% Test is not compulsory and other approaches may be acceptable.   

The principal investment strategy of the Portfolio states that the Active Allocated Portion will consist of approximately 30% of the Portfolio’s net assets, and that it will invest primarily in equity securities of U.S. and non-U.S. companies. The strategy also states that the Index Allocated Portion will consist of approximately 70% of the Portfolio’s net assets and will be allocated approximately 30-50% in each of the S&P 500 and MSCI EAFE, and 10-30% in the MSCI EM. Please also note that the Portfolio’s most recent annual report shows that approximately 50.9% of total net assets was invested in over 30 countries outside the United States, and that the remainder was invested in the United States. The Trust believes that the Portfolio’s investment strategy and related disclosure is consistent with the staff’s guidance on use of the term “global” in fund names. 

Response:  The Trust has deleted the references to “developing country” and retained the references to emerging market.   

Response:  The discussion of the managed volatility strategy in the prospectus refers consistently to the Portfolio as a whole.  The Trust believes that no further revisions are necessary. 

Response:  The Trust has reviewed these Portfolios’ investments and has determined that the current emerging markets risk disclosure is appropriate.  The Trust has included additional information about the risks of investing in China specifically in the Statement of Additional Information.  

Response:  The principal risks of options and swaps are described in the “Derivatives Risk” risk factor and additional information about these instruments is provided in the statutory prospectus.  The Trust believes that these disclosures are consistent with the views set forth in the Barry Miller Letter. 

Response:  Returns of the MSCI All Country World (Net) Index are presented net of withholding taxes on income generated in each country in the Index. 

Response:  As stated under “Risk/Return Bar Chart and Table,” Class K shares have not commenced operations as of the date of the prospectus.  Therefore, “Other Expenses” for Class K are based on estimated amounts for the current fiscal year.  Expenses for Class K are estimated to differ from those of the other share classes, Class IA and Class IB, only by the amount of the 12b-1 fee applicable to Class IA and Class IB (i.e., 0.25%). 

Response:  Please see the response to Comment 2.a. above.  The Portfolio’s prospectus states that, under normal circumstances, the Portfolio invests primarily in equity securities of U.S. and foreign companies, that the Portfolio can invest without limit in foreign securities, that the Portfolio normally will invest a significant portion of its assets in foreign securities, and that the Portfolio expects to invest in companies tied economically to a number of different countries and normally invests in companies in at least three countries (one of which may be the United States).  Please also note that the Portfolio of Investments in the Portfolio’s most recent annual report shows that, of investments in equity securities, which totaled 98% of the Portfolio, 49% was invested in the United States and the other 49% was invested in more than 10 other countries.  The Trust believes that the Portfolio’s investment strategy and related disclosure is consistent with the staff’s guidance on use of the term “global” in fund names. 

Response:  Please see response to comment 2.f. 

Response:  The Trust will include the requested disclosure in the Item 4 and Item 9 disclosure for the Portfolio.  In addition, the Portfolio will include risk disclosure as follows: “To the extent that the securities of a limited number of companies represent a significant percentage of the relevant index, the Portfolio may be subject to more risk because changes in the value of a single security may have a more significant effect, either positive or negative, on the Portfolio’s net asset value. The Portfolio may experience greater performance volatility than a portfolio that seeks to track the performance of an index that is more broadly diversified.” 

Response:  The Trust has moved the asterisk and first footnote, which indicates that other expenses are based on estimated amounts for the current fiscal year, to the column for Class K only, because Class K will not have commenced operations as of the expected date of the prospectus (May 1, 2020).  

Response:  The Trust has revised the Portfolio’s principal investment strategy to include the following disclosure:  

The Sub-Adviser generally invests the Portfolio’s assets in approximately 35 to 65 companies and may invest a significant percentage of the Portfolio’s assets in a single issuer or a small number of issuers. The Sub-Adviser normally invests the Portfolio’s assets across different industries and sectors, but the Sub-Adviser may invest a significant percentage of the Portfolio’s assets in issuers in a single or small number of industries or sectors, such as the information technology sector. The Sub-Adviser may invest the Portfolio’s assets in foreign securities. 

Response:  The Trust has deleted this risk factor.  

Response:  As the Portfolio does not invest in subprime mortgages as a principal investment strategy, the reference to subprime mortgages has been deleted from the summary risk factor.  

Response:  The Trust has moved the asterisk and first footnote, which indicates that other expenses are based on estimated amounts for the current fiscal year, to the column for Class K only, because Class K will not have commenced operations as of the expected date of the prospectus (May 1, 2020).   

Response:  The summary prospectus for the Portfolio currently includes a risk factor, “Focused Portfolio Risk,” that addresses non-diversification risk.  The Trust will replace the “Focused Portfolio Risk” risk factor with the following: 

Non-Diversified Portfolio Risk: The Portfolio may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the Portfolio’s performance may be more vulnerable to changes in market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund. 

The risk factor in the statutory prospectus will also be modified accordingly. 

Response:  The Trust will modify the prospectus disclosure to provide that  that “[t]he Sub-Adviser considers an issuer to be principally engaged in offering, using or developing products, processes, or services that will provide or will benefit significantly from technological and scientific advances and improvements if at least 50% of any issuer’s assets, income, sales, or profits are committed to, or derived from, such activities, or a third party has given the issuer an industry or sector classification consistent with such activities. These issuers are in such fields as computer systems and software, networking and telecommunications, internet, business services, and electronics, and healthcare.”   

Response:  The current disclosure lists examples of industries that are included in the Portfolio’s investment policy.  The Trust is not aware of any requirement to provide examples of industries or sectors in which the Portfolio will not invest, and does not believe that this is a common disclosure practice in the industry. 

Response:  The Trust will remove this risk factor. 

Response:  The Portfolio commenced operations in October 2018 and therefore has less than three years of operations and still has a relatively small asset base; accordingly, the Trust has retained “New Portfolio Risk” in the “Principal Risks” section for this Portfolio. 

Response:  The Trust has moved the asterisk and first footnote, which indicates that other expenses are based on estimated amounts for the current fiscal year, to the column for Class K only, because Class K will not have commenced operations as of the expected date of the prospectus (May 1, 2020).  

Response:  The prospectus states that “… companies within the energy sector … may include, but are not limited to, oil companies, oil and gas drilling, equipment and services companies, oil and gas exploration and production companies, oil and gas storage and transportation companies, oil and gas pipeline companies, refining and marketing companies, energy conservation companies, coal transporters, utilities, alternative energy companies and innovative energy technology companies.”  

The Trust notes that neither Section 35(d) of the 1940 Act, Rule 35d-1 under the 1940 Act, the release adopting Rule 35d-1, nor the Division of Investment Management’s Frequently Asked Questions about Rule 35d-1 requires a fund to adopt, e.g., a “50% of its revenues or profits” test to determine whether a company is in a particular sector. The Trust also notes that the Staff’s reference to Note 24 of the adopting release addresses an SEC proposal to use a “50% of its revenues or profits” test to define companies tied to a particular country or geographic region, and was not proposed for industry testing purposes.  In addition, the Trust notes that this proposal was not adopted by the SEC, in favor of a more flexible approach allowing registrants to determine an appropriate set of criteria for such investments.  The Trust believes that the Portfolio’s investment eligibility criteria are consistent with the requirements, as well as the intent and purposes, of Rule 35d-1. 

Response:  The wording of the concentration policy in the “Principal Investment Strategies” matches the wording of the Portfolio’s concentration policy in the SAI.  

Response:  The Item 9 disclosure in the prospectus will be revised to disclose that a Portfolio that seeks to achieve a total return before expenses that approximates the total return performance of a particular index will generally be concentrated in an industry or group of industries to the extent the index concentrates in a particular industry or group of industries, and will identify the Portfolios to which this applies. 

Response:  The Trust has revised the disclosure to state: ”As applicable, to the extent a Portfolio invests in securities of other investment companies or investment vehicles (such as exchange-traded funds), it takes into consideration the investment policies of such investment companies and investment vehicles at the time of investment in determining compliance with its 80% policy.”   

Response:  The Trust notes that, as required by Item 4 of Form N-1A, the Portfolios’ principal risks are identified in the summary portion of the prospectuses. The “More information on strategies, risks, benchmarks and Underlying ETFs” section of the statutory prospectus affirms that the Portfolios’ principal risks are discussed in the summary prospectuses. In addition, this section includes a separate sub-section for principal investment risks, which provides additional information about the Portfolios’ principal risks identified in the summary prospectuses, and a separate subsection for “Additional Information about Risks,” which provides additional information that may be associated with the Portfolios’ principal risks but that may not be principal to a Portfolio’s investment strategies. 

General Instruction C.(3)(a) of Form N-1A provides that “[i]nformation that is included in Items 2 through 8 need not be repeated elsewhere in the prospectus.” The Trust believes that the information disclosed in response to Item 4 need not be identified again as a principal risk in response to Item 9(b). 

Response:  The SAI provides that “a Portfolio that seeks to achieve a total return before expenses that approximates the total return performance of a particular index will generally be concentrated in an industry or group of industries to the extent the index concentrates in a particular industry or group of industries.”  The SAI will identify the Portfolios to which this applies.   

Response:  The Trust respectfully submits that the disclosure as currently provided is consistent with the requirements of Item 19(a)(3) of Form N-1A, which requires the disclosure of information regarding “the advisory fee payable by the Fund.” As the sub-advisory fees are paid by the Adviser, and not the Portfolio, the Trust respectfully declines to make any changes in response to this comment. 

Response:  The Trust has revised the language to state the following: “While the 1940 Act does not define what constitutes “concentration” in an industry, the SEC staff has taken the position that investment of 25% or more of a portfolio’s total assets in one or more issuers conducting their principal business activities in the same industry or group of industries constitutes concentration.” 

Response:  The Trust is not aware of a requirement to “look through” underlying investment companies in which the Portfolio invests for purposes of administering its concentration policy.  The Trust believes that its current policy on concentration, as disclosed in its SAI, complies with relevant interpretations applicable to open-end funds.  The Trust respectfully submits that no revisions are required. 

Response:  The Trust confirms that it currently values derivatives at mark to market value for purposes of determining compliance with a Portfolio’s 80% investment policy pursuant to Rule 35d-1. The Trust, however, respectfully declines to add disclosure stating that derivatives are valued on a mark to market basis rather than notional value for purposes of calculating compliance with a Portfolio’s 80% investment policy. 

Response:  The compensation received by the principal underwriter from the Portfolio is disclosed in the SAI in the section titled “The Distributor.”  The Trust does not pay the Distributor any underwriting commissions for the sale of fund shares, and therefore Item 25(a)(3) of Form N-1A is not applicable.  The Distributor does not receive any underwriting discounts and commissions, compensation on redemptions and repurchases, or brokerage commissions, as referenced in Item 25(b) of Form N-1A.  Disclosure describing “other compensation” as referenced in Item 25(b) appears in the section “The Distributor” in the SAI in tabular format.  The table shows the amounts paid by the Class IA and Class IB shares of the Portfolio for the Distributor pursuant to the Rule 12b-1 Distribution Plan for the fiscal year ended December 31, 2019. This information is responsive to both Item 19(g) and Item 25(b) of Form N-1A. However, in response to the staff’s comment, the Trust has added the following statement in the section entitled “The Distributor”: “The Distributor does not receive any underwriting discounts or commissions, compensation on redemptions and repurchases, or brokerage commissions from the Trust.” 

Response:  The Trust will provide in its next post-effective amendment the information for other accounts managed and ownership of fund shares as of the most recent practicable date with respect to new portfolio managers. 

***** 

If you have any questions or comments regarding the foregoing, please contact me at (202) 778-9351 or my colleague Fatima Sulaiman at (202) 778-9082. 

Sincerely, 

/s/ Mark C Amorosi 

cc:William T. MacGregor, Esq. 

Kiesha T. Astwood-Smith, Esq. 

Victoria Zozulya, Esq. 

Maureen Kane, Esq. 

AXA Equitable Funds Management Group, LLC 

Fatima Sulaiman, Esq. 

K&L Gates LLP