Korea Investment Management
Korea Investment Management said Tuesday it will list the “ACE K-Defense TOP5+ exchange-traded fund (ETF)” on the Korea Stock Exchange on Wednesday, an ETF that concentrates its investments in the leading stocks driving Korea’s advanced defense industry.
The ETF focuses on core companies powering the K-defense earnings rally on the back of strong export performance. Instead of adjacent sectors such as shipbuilding or maritime defense, it concentrates on defense infrastructure and producers of core K-defense weapons systems. The fund tracks the “KRX K-AI Defense TOP5+ Index,” which allocates 80 percent of the total portfolio weight to the top five AI defense theme companies listed on Korea’s stock market, with the remaining 20 percent distributed among the other five stocks.
Based on the example portfolio in the April 30 prospectus, the top five holdings are expected to be Hyundai Rotem, LIG Defense & Aerospace, Hanwha Aerospace, Korea Aerospace Industries, and Hanwha Systems. The remaining holdings are expected to include RFHIC, Satrec Initiative, i3system, Intellian Technologies, and Sphere.
Major Korean defense companies have recently signed sizable export contracts. The Export-Import Bank of Korea projects K-defense exports will reach around $34 billion by 2030 in a related report. Nam Yong-soo, head of the ETF division at Korea Investment Management, said, “The global defense market is currently experiencing supply bottlenecks as the weakening of the U.S.-centered unipolar order and geopolitical crises overlap with demand for weapons restocking.” He added, “In step with soaring demand for ground weapons, Korean defense companies are emerging as key partners in the global supply chain.”