{
    "type": "ETF",
    "ucits": true,
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": "Swaps usage",
    "classification": "complex",
    "supporting_data": "The HSBC MSCI PACIFIC ex JAPAN UCITS ETF primarily uses physical replication investing directly in shares of companies in the MSCI Pacific ex Japan Index. However, the KIID and PRIIPs KID explicitly state that the Fund may invest up to 10% of its assets in total return swaps and contracts for difference, and may use derivatives for efficient portfolio management and investment purposes. The monthly factsheet confirms physical full replication but also acknowledges up to 10% exposure to total return swaps and derivatives. There is no leverage or inverse exposure, and the risk profile is medium to high (category 4-6 in different documents). The presence of swap agreements, even at a limited level, triggers the MiFID II complexity classification as 'complex' because swaps are derivative instruments that introduce counterparty risk and complexity beyond straightforward physical replication. The Fund does not employ leverage, capital protection, or structured features, and invests in liquid equity securities. The risk disclosures mention counterparty risk and derivative risk, supporting the complexity classification. Costs are straightforward with no performance fees, but swap usage implies additional derivative-related costs. Overall, the limited but explicit use of total return swaps and derivatives for investment purposes, combined with counterparty risk disclosures, drives the classification as complex under MiFID II despite the physical replication approach and absence of leverage."
}