{
    "type": "ETF",
    "ucits": true,
    "fund_name": "HSBC MSCI EMERGING MARKETS UCITS ETF",
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": [
        "Use of total return swaps up to 10%",
        "Counterparty risk from swaps",
        "Emerging markets exposure with liquidity and currency risks",
        "Securities lending up to 30%",
        "Tracking error risk",
        "Derivatives used for efficient portfolio management and investment purposes"
    ],
    "classification": "complex",
    "supporting_data": "The Fund aims to track the MSCI Emerging Markets Index primarily through physical replication of underlying shares, confirmed by the monthly factsheet stating 'Physical - Full' replication method. However, the KIID and PRIIPs KID explicitly state the Fund may invest up to 10% of its assets in total return swaps and contracts for difference, with derivative use also for risk and cost management and additional capital generation. This swap usage, even if limited to 10%, introduces counterparty risk and derivative complexity. The Fund also engages in securities lending up to 30%, which adds operational and counterparty risk. The risk profile is high (category 6 in KIID) due to emerging markets volatility, liquidity risk, currency risk, and leverage risk from derivatives. The PRIIPs KID risk indicator is lower (4/7), but notes investment leverage risk and counterparty risk. The Fund does not use leverage or inverse strategies, and no capital protection or structured features are present. The underlying assets are equities in emerging markets, which are less liquid and more volatile, adding to complexity. The presence of total return swaps and derivative instruments as an inherent part of the investment strategy mandates classification as complex under MiFID II. The Fund is UCITS compliant and an ETF. No performance fees or complex fee structures beyond a simple TER of 0.15% are noted. The Fund\u2019s replication is physical but supplemented by synthetic elements (swaps). Therefore, despite physical replication predominance, the use of swaps and derivative instruments for investment purposes, plus counterparty risk, drive the complex classification under MiFID II."
}