{
    "type": "ETF",
    "ucits": true,
    "replication_method": "physical",
    "swaps": true,
    "derivatives": false,
    "leverage": false,
    "inverse": false,
    "complex_factors": "Use of OTC derivatives for currency hedging and efficiency, counterparty risk exposure",
    "classification": "complex",
    "supporting_data": "The UBS (Lux) Fund Solutions - MSCI Switzerland 20/35 UCITS ETF is a UCITS-compliant ETF that primarily uses physical replication (full replication) of the MSCI Switzerland 20/35 100% hedged to USD Index. The fund invests directly in large and mid-cap equities of Switzerland, with a currency hedge to USD. The KIID and PRIIPs KID documents indicate that derivatives are used primarily for currency hedging and to gain exposure efficiencies where direct replication is not practicable. The use of OTC derivatives (currency forwards) introduces counterparty risk, which is mitigated by collateral policies. There is no indication of leverage, inverse exposure, or synthetic replication via total return swaps or unfunded swaps. The risk profile in the KIID is high (risk category 6 out of 7), driven by equity market volatility rather than structural complexity. The PRIIPs KID shows a medium risk rating (4 out of 7), reflecting the product's risk over a 5-year horizon and the currency risk hedging. The fund does not employ leverage or complex structured products, nor does it invest in contingent convertible bonds or other complex underlying assets. Costs are straightforward with a TER of 0.23%, no performance fees, and no complex fee structures. However, the presence of OTC derivatives for currency hedging and the associated counterparty risk, as well as the potential use of derivatives to gain exposure efficiencies, trigger MiFID II complexity classification. Although derivatives are used for risk management and efficiency rather than as an inherent element of the investment strategy, the presence of OTC derivatives and counterparty risk exposure mandates classification as complex under MiFID II. There is no mention of roll costs, contango, or backwardation effects. Overall, the fund is physically replicated, UCITS compliant, and not leveraged, but the use of OTC derivatives and counterparty risk exposure leads to a 'complex' classification under MiFID II rules."
}