{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": false,
    "swaps": false,
    "inverse": false,
    "replication_method": "physical",
    "complex_factors": "Preferred securities with subordinated debt features and perpetual bonds",
    "classification": "non-complex",
    "supporting_data": "The Invesco Preferred Shares UCITS ETF is a UCITS-compliant ETF that aims to physically replicate the ICE BofA Diversified Core Plus Fixed Rate Preferred Securities Net Total Return Index by holding the underlying securities as far as practicable. It does not use derivatives as an inherent part of its investment strategy but may use securities lending as a secondary income source, which is well-managed under UCITS rules. The ETF invests in preferred securities, including perpetual preferred shares and subordinated debt, which carry credit and interest rate risks but do not embed derivatives or complex payoff structures. The fund does not employ leverage beyond UCITS limits, nor does it use synthetic replication or embedded derivatives such as swaps. The index tracked is transparent and publicly available, supporting ease of understanding for retail investors. According to MiFID II Article 25(4)(a)(iv) and Article 57 criteria, UCITS ETFs that physically replicate transparent indices and do not embed derivatives or complex structures are presumed non-complex. Although the fund invests in hybrid instruments like perpetual subordinated debt, these do not automatically trigger a complex classification unless derivatives or embedded options are present, which is not the case here. Therefore, the ETF is classified as non-complex under MiFID II, requiring no appropriateness assessment for execution-only sales to retail investors. This aligns with ESMA and CESR guidance that UCITS ETFs with physical replication and limited derivative use for efficient portfolio management are non-complex. The risk profile (risk category 6) reflects market and credit risk inherent in preferred securities but does not imply structural complexity. No significant leverage, embedded derivatives, or opaque features are present. Hence, the ETF is non-complex under MiFID II rules."
}