{
    "type": "ETF",
    "ucits": true,
    "replication_method": "physical",
    "swaps": true,
    "derivatives": false,
    "leverage": false,
    "inverse": false,
    "complex_factors": "Use of OTC derivatives for 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 GBP Index. However, the KIID and PRIIPs KID documents explicitly state that the fund may use derivatives, including OTC derivatives and currency forwards, to achieve currency hedging and to generate efficiencies where direct replication is not practicable. The use of OTC derivatives introduces counterparty risk, which is mitigated by a collateral policy but remains a complexity factor. The fund does not employ leverage, inverse exposure, or capital protection mechanisms. The risk profile in the KIID is high (risk category 6), reflecting equity market volatility rather than derivative complexity. The PRIIPs KID shows a medium risk rating (4/7), indicating moderate risk for retail investors with basic financial understanding. The fact sheet confirms physical full replication as the primary method, with derivatives used for hedging and efficiency rather than as an inherent element of the investment strategy. Despite derivatives being used for hedging, the presence of OTC derivatives and counterparty risk exposure triggers the MiFID II complexity classification. There is no mention of synthetic replication or funded/unfunded swaps, but the use of OTC derivatives and counterparty risk disclosures require classification as complex under MiFID II. No leverage or inverse exposure is present. Costs are straightforward with no performance fees, and the ongoing charges are low (0.23%). The fund invests in liquid, transparent equity securities of Swiss companies, with no complex underlying assets such as contingent convertible bonds or CLOs. The complexity arises mainly from the use of OTC derivatives and counterparty risk exposure inherent in the hedging strategy."
}