{
    "type": "ETF",
    "ucits": true,
    "fund_name": "HSBC Emerging Market Sustainable Equity UCITS ETF",
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": [
        "Use of total return swaps up to 10%",
        "Exposure to emerging markets with higher volatility and liquidity risk",
        "Securities lending up to 30% of assets",
        "High concentration risk in benchmark",
        "Use of derivatives for investment and efficient portfolio management purposes"
    ],
    "classification": "complex",
    "supporting_data": "The Fund aims to track the FTSE Emerging ESG Low Carbon Select Index using primarily physical replication (full replication) of underlying shares. However, it may invest up to 10% of its assets in total return swaps and contracts for difference, which are derivative instruments. The KIID and PRIIPs documents confirm the use of swaps and derivatives not only for risk management but also for investment purposes, indicating inherent derivative exposure. The Fund also engages in securities lending up to 30% of assets, which adds complexity. The underlying index is concentrated and focused on emerging markets, which are inherently more volatile and less liquid, increasing complexity. The risk profile is high (category 6 in KIID), with explicit counterparty risk and derivatives risk disclosures. Although leverage is not employed (no leverage ratio above 1:1, no inverse or leveraged terms), the presence of funded or unfunded swaps and counterparty exposure triggers MiFID II complexity classification. The derivatives are not solely for risk management but also for investment exposure, so 'derivatives' is marked true. The Fund is UCITS compliant and an ETF. No capital protection or structured features are present. Costs are straightforward with no performance fees but include swap-related costs. The PRIIPs KID shows a medium risk rating (4/7) but this is due to different risk calculation methodology and does not override the MiFID II complexity assessment. The monthly factsheet confirms physical full replication as primary method but acknowledges up to 10% swap usage and securities lending, confirming derivative and counterparty risk exposure. Therefore, despite physical replication predominance, the use of swaps and derivative instruments for investment purposes, combined with emerging market exposure and securities lending, leads to a classification of 'complex' under MiFID II rules.",
    "risk_level_assessment": "The Fund's stated risk profile is high (category 6 out of 7) in the KIID, reflecting the volatility of emerging markets and derivative usage. The PRIIPs KID shows a medium risk (4/7), but this is due to different risk calculation methodologies. The high risk rating aligns with the complexity factors identified, including derivative exposure, counterparty risk, and securities lending. This supports the classification as complex, as retail investors may find the product difficult to understand and the risks significant."
}