{
    "type": "ETF",
    "ucits": true,
    "fund_name": "iShares MSCI Japan USD Hedged UCITS ETF",
    "investment_objective": "To track the MSCI Japan 100% Hedged to USD Net TR Index, providing capital growth and income reflecting the performance of large and mid-cap Japanese equities with currency hedging from JPY to USD.",
    "primary_asset_class": "Equity",
    "geographic_focus": "Japan",
    "replication_method": "physical",
    "swaps": true,
    "derivatives": false,
    "leverage": false,
    "inverse": false,
    "complex_factors": [
        "Use of FX forward contracts for currency hedging",
        "Counterparty risk from derivative counterparties",
        "Optimised physical replication involving derivatives for hedging",
        "Securities lending arrangements"
    ],
    "classification": "complex",
    "supporting_data": "The Fund is a UCITS ETF investing primarily in Japanese equities aiming to track the MSCI Japan 100% Hedged to USD Net TR Index. The replication method is physical with optimised techniques, including direct investment in underlying securities. However, the Fund uses FX forward contracts (financial derivative instruments) to hedge currency exposure from JPY to USD, which introduces derivative counterparty risk. The KIID and PRIIPs documents explicitly mention the use of FDIs including FX forwards for direct investment purposes and highlight counterparty risk as a material risk factor. The Fund also engages in securities lending to offset costs, which adds operational complexity. There is no leverage or inverse exposure, and no capital protection or structured features. The risk rating in the KIID is 6 out of 7, indicating a higher risk profile mainly due to equity market exposure and derivative counterparty risk. The PRIIPs KID classifies the risk as 4 out of 7, medium risk, reflecting the hedging and equity exposure. The presence of derivative instruments (FX forwards) for hedging, combined with counterparty risk and securities lending, triggers MiFID II complexity classification despite the physical replication of equities. The derivatives are used as an inherent element of the strategy (currency hedging), not merely for risk management, so 'derivatives' is marked true. The Fund does not use synthetic replication via swaps on equities, but the FX forwards are derivatives and introduce complexity. No leverage or inverse exposure is present. The Fund is UCITS compliant. Overall, the complexity arises from the use of FX forwards (derivatives) and counterparty risk, not from leverage or complex underlying assets.",
    "risk_level_assessment": "The Fund's stated risk profile is high (6/7) in the KIID due to equity market exposure and counterparty risk from derivatives. The PRIIPs KID shows a medium risk (4/7) reflecting the hedged equity exposure. The complexity classification aligns with the presence of derivatives and counterparty risk, which may be difficult for retail investors to fully understand despite the physical replication of equities."
}