{
    "type": "ETF",
    "ucits": true,
    "fund_name": "HSBC MSCI PACIFIC ex JAPAN UCITS ETF",
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": [
        "Use of total return swaps up to 10% of assets",
        "Potential use of derivatives for investment purposes",
        "Securities lending up to 25% of assets",
        "Exposure to counterparty risk from swaps",
        "Tracking error risk due to partial replication and derivative use"
    ],
    "classification": "complex",
    "supporting_data": "The Fund aims to track the MSCI Pacific ex Japan Index primarily through physical replication of shares, investing in the underlying equities directly. However, the KIID and PRIIPs documents disclose that the Fund may invest up to 10% of its assets in total return swaps and contracts for difference, and derivatives may be used for both efficient portfolio management and investment purposes. The Fund also engages in securities lending up to 25% of assets. The monthly factsheet confirms physical full replication as the primary method but acknowledges derivative usage up to 10%. The presence of total return swaps, even at a limited level, introduces counterparty risk and derivative complexity. The Fund is UCITS compliant and does not employ leverage or inverse strategies. The risk profile is medium to high (category 4 in PRIIPs, category 6 in KIID), reflecting market volatility and derivative risks. The use of swaps for gaining exposure rather than solely for risk management means derivatives are an inherent element of the strategy, triggering MiFID II complexity classification. No capital protection or structured features are present. Costs are straightforward with no performance fees, but derivative and securities lending activities add complexity. Overall, the Fund\u2019s partial use of synthetic instruments (swaps) and securities lending, combined with counterparty risk disclosures and derivative risk warnings, lead to a classification as complex under MiFID II despite the predominant physical replication and absence of leverage or inverse exposure."
}