{
    "type": "ETF",
    "ucits": true,
    "fund_name": "HSBC MSCI JAPAN CLIMATE PARIS ALIGNED UCITS ETF",
    "replication_method": "physical",
    "leverage": false,
    "derivatives": true,
    "swaps": true,
    "inverse": false,
    "complex_factors": [
        "Use of total return swaps up to 10% of assets",
        "Use of contracts for difference up to 5% of assets",
        "Derivative use for investment and efficient portfolio management",
        "Counterparty risk from swap counterparties",
        "Securities lending up to 30% of assets",
        "Tracking error risk",
        "Exposure to complex ESG and climate-aligned index"
    ],
    "classification": "complex",
    "supporting_data": "The Fund is a UCITS ETF physically replicating the MSCI Japan Climate Paris Aligned Index, investing primarily in equities of large and mid-sized Japanese companies. However, it may invest up to 10% of its assets in total return swaps and up to 5% in contracts for difference, indicating synthetic elements in replication. Derivatives are also used for efficient portfolio management and investment purposes, not solely for risk hedging, which means derivative exposure is inherent to the strategy. The Fund also engages in securities lending up to 30% of assets, adding complexity and counterparty risk. The KIID and PRIIPs KID disclose counterparty risk and derivative risk prominently, with warnings about leverage effects and liquidity risk. The risk and reward indicator is high (category 6 in KIID), reflecting volatility and complexity. The monthly factsheet confirms physical replication but acknowledges derivative usage and swap exposure. There is no leverage or inverse exposure, but the presence of swaps and derivative contracts, combined with counterparty risk and securities lending, triggers MiFID II complexity classification. The Fund tracks a complex ESG/climate-aligned index with exclusion criteria and sustainability overlays, which may add to the difficulty of understanding the product fully. Costs are straightforward with no performance fees, but derivative and swap usage imply additional embedded costs and risks. Overall, despite physical replication of equities, the derivative and swap usage, counterparty risk, and securities lending lead to a classification of 'complex' under MiFID II rules."
}