{
    "type": "ETF",
    "ucits": true,
    "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 and risk management",
        "Counterparty risk exposure",
        "Securities lending up to 30% of assets",
        "Tracking error risk",
        "Exposure to single issuer up to 35% in exceptional conditions"
    ],
    "classification": "complex",
    "supporting_data": "The HSBC MSCI Canada UCITS ETF is a UCITS-compliant ETF that primarily uses physical replication of the MSCI Canada Index, investing directly in shares of the index constituents. However, the Fund may invest up to 10% of its assets in total return swaps and contracts for difference, which are derivative instruments used to gain exposure when direct investment is not practical. The Fund also uses derivatives for efficient portfolio management, including risk and cost management, and may engage in securities lending up to 30% of its assets. The KIID and PRIIPs KID documents explicitly mention counterparty risk associated with derivatives and swaps, and the Fund\u2019s risk profile is rated 5 out of 7, indicating medium-high risk. There is no leverage or inverse exposure, and the Fund does not employ capital protection or structured features. The monthly factsheet confirms physical replication as the primary method but acknowledges derivative use up to 10% of assets. According to MiFID II criteria, the presence of total return swaps and derivative usage for investment purposes, combined with counterparty risk and securities lending, classifies this ETF as complex. Although derivatives are limited and not used for leverage, the swap usage and associated risks require a complex classification. The Fund\u2019s risk profile and disclosures about derivative and counterparty risks further support this classification. No leverage or inverse exposure is present, and the Fund invests in liquid, transparent equity securities. The complexity arises mainly from the partial synthetic exposure via swaps and the related counterparty risk, which may not be easily understood by retail investors."
}