{
    "type": "ETF",
    "ucits": true,
    "fund_name": "HSBC ASIA PACIFIC EX JAPAN SUSTAINABLE EQUITY UCITS ETF",
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": [
        "Use of total return swaps and contracts for difference",
        "Counterparty risk exposure",
        "Investment in other funds",
        "High concentration in a few issuers",
        "Use of securities lending"
    ],
    "classification": "complex",
    "supporting_data": "The Fund aims to track the FTSE Asia Pacific ex Japan ESG Low Carbon Select Index using primarily physical full replication, as confirmed by the monthly factsheet. However, the KIID and PRIIPs KID disclose that the Fund may invest up to 15% of its assets in total return swaps and contracts for difference, and up to 10% in other funds, which may themselves use derivatives. The Fund also engages in securities lending up to 30% of assets (not expected to exceed 25%). These derivative instruments are not solely for risk management but are part of the investment strategy to gain exposure when direct investment is not practical. The presence of total return swaps and contracts for difference, along with counterparty risk disclosures and securities lending, triggers complexity under MiFID II. There is no leverage or inverse exposure, and the Fund is UCITS compliant. The risk profile is high (category 6 in KIID) reflecting market volatility and derivative usage, but the PRIIPs KID shows a medium risk (4/7), indicating some divergence in risk assessment frameworks. The Fund\u2019s use of derivatives is limited but material enough to classify it as complex under MiFID II, especially given the swap usage and counterparty risk. No capital protection or structured features are present. The Fund\u2019s benchmark is a relatively concentrated ESG index, which may add to complexity but is not a primary driver. Costs are straightforward with no performance fees, but derivative-related costs exist. Overall, the Fund\u2019s partial synthetic exposure via swaps and contracts for difference, combined with counterparty risk and securities lending, leads to a MiFID II classification of complex."
}