{
    "type": "ETF",
    "ucits": true,
    "fund_name": "UBS MSCI Canada UCITS ETF, class hUSD acc",
    "investment_objective": "Passive replication of MSCI Canada 100% hedged to USD Index (Net Return) via direct investments and/or derivatives for efficiency and practicability",
    "primary_asset_class": "Equity",
    "geographic_focus": "Canada",
    "replication_method": "physical",
    "swaps": true,
    "derivatives": false,
    "leverage": false,
    "inverse": false,
    "complex_factors": "Use of OTC derivatives (swaps) for index exposure and currency hedging, counterparty risk, structured notes holdings",
    "classification": "complex",
    "supporting_data": "The ETF primarily invests physically in the MSCI Canada index constituents but also uses derivatives, including OTC swaps, to gain exposure where direct replication is impractical or to improve efficiency. The KIID and PRIIPs KID explicitly mention the use of OTC derivatives and swap agreements, which introduce counterparty risk, although mitigated by collateral policies. The fund is currency-hedged via currency forwards, which are derivatives. The fund holds structured notes listed on regulated markets, adding complexity. The fund is UCITS compliant and does not employ leverage or inverse strategies. The risk profile is medium to high (risk category 5 in KIID, 4 in PRIIPs KID), reflecting equity volatility and derivative usage. The monthly factsheet confirms physical full replication as the primary method but acknowledges derivative use for efficiency and hedging. The presence of OTC swaps and structured notes, combined with counterparty risk disclosures, triggers MiFID II complexity classification despite the absence of leverage or inverse exposure. The derivatives are used as an inherent part of the investment strategy, not solely for risk management, so derivatives flag is false only if derivatives are used solely for risk management, which is not the case here. Therefore, the fund is classified as complex under MiFID II rules.",
    "risk_level_assessment": "The fund's risk category is 5 (KIID) and 4 (PRIIPs KID), indicating medium to high risk mainly due to equity market exposure and derivative usage. The complexity arises from the use of OTC derivatives (swaps) and structured notes, which may not be easily understood by retail investors, justifying the complex classification despite the absence of leverage or inverse exposure."
}