{
    "type": "ETF",
    "ucits": true,
    "replication_method": "physical",
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "complex_factors": "Use of OTC derivatives for currency hedging and efficiency, counterparty risk exposure",
    "classification": "complex",
    "supporting_data": "The UBS MSCI Canada UCITS ETF primarily uses physical replication of the MSCI Canada 100% hedged to CHF Index, investing directly in the underlying equities. However, the fund also uses derivatives, specifically OTC currency forwards, to hedge currency risk fully (100% hedged to CHF). The KIID and PRIIPs KID explicitly mention the use of derivatives to gain exposure where direct replication is not practicable and to generate efficiencies, and the use of OTC derivatives introduces counterparty risk, mitigated by collateral policies. The monthly factsheet confirms physical full replication of equities with currency hedging via forwards. There is no leverage, inverse exposure, or complex structured products like contingent bonds. The risk profile is medium to high (risk category 5 in KIID, 4 in PRIIPs KID), reflecting equity market volatility and derivative use. Although derivatives are used primarily for hedging and efficiency rather than speculative exposure, the presence of OTC derivatives and counterparty risk exposure classifies the ETF as complex under MiFID II rules. The fund is UCITS compliant, with straightforward fee structure (TER 0.36%), no performance fees, and no leverage. The complexity arises mainly from the use of OTC derivatives (currency forwards) and associated counterparty risk, which may not be easily understood by retail investors. There is no mention of synthetic replication via swaps, but the use of OTC forwards for currency hedging is a derivative usage that triggers complexity classification. No leverage or inverse features are present. The fund invests in liquid, transparent Canadian equities, but the currency hedging and OTC derivative use elevate complexity. No capital protection or structured features are present. The PRIIPs KID does not carry a comprehension warning but notes medium risk and counterparty risk. Overall, the fund is complex due to derivative usage and counterparty risk exposure despite physical replication of equities and no leverage."
}