{
    "type": "ETF",
    "ucits": true,
    "fund_name": "UBS Factor MSCI EMU Quality Screened UCITS ETF",
    "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 ETF is a UCITS-compliant, physically replicated ETF tracking the MSCI EMU Quality Advanced Target Select 100% Hedged to CHF Index. The replication is primarily physical (full replication) as confirmed by the factsheet. However, the KIID and PRIIPs KID explicitly state that the fund may use derivatives, including OTC derivatives such as currency forwards, to achieve currency hedging and to gain exposure efficiently when direct replication is not practicable. The use of OTC derivatives introduces counterparty risk, although mitigated by collateral policies. The fund does not use leverage, inverse or structured capital protection features. The risk profile is medium to high (risk category 5-6 in KIID, 4 in PRIIPs KID), reflecting equity market volatility and derivative usage. The derivatives are used as an inherent part of the strategy for currency hedging and efficient exposure, not merely for risk management, so 'derivatives' is marked true. The presence of OTC derivatives and counterparty risk exposure, even without leverage or synthetic replication, triggers MiFID II complexity classification. There is no mention of funded or unfunded swaps, total return swaps, or complex underlying assets like contingent bonds. The fund does not engage in securities lending. The costs are straightforward with no performance fees or complex fee structures. The PRIIPs KID does not carry a comprehension warning but notes currency risk and counterparty risk. Overall, the complexity arises mainly from the use of OTC derivatives (currency forwards) and associated counterparty risk, which under MiFID II rules classifies the ETF as complex despite physical replication and no leverage.",
    "risk_level_assessment": "The fund's stated risk profile is medium to high (risk category 5-6 in KIID, 4 in PRIIPs KID), consistent with equity market exposure and derivative usage. The complexity classification aligns with the presence of OTC derivatives and counterparty risk, which may not be easily understood by retail investors despite the fund's physical replication and lack of leverage."
}