South Korea's Defense Sector Gets A US Gateway With KDEF ETF (UPDATED)

[Editor’s note: This story was updated to include the market’s response following the mid-January arrest of Korea’s President Yoon Suk Yeol]

In an effort to bring South Korea's defense sector into the U.S. investment scene, Exchange Traded Concepts launched the Hanwha Asset Management's PLUS Korea Defense Industry Index ETF KDEF, offering investors exposure to South Korea's thriving defense industry.

"We are enthusiastic to introduce the PLUS Korea Defense Industry Index ETF (KDEF) to the U.S. market," said Hanwha CEO Kim Jong-ho. "Expanding on the foundation of our Plus K-Defense ETF listed in Korea, this launch represents an opportunity to provide U.S. investors with exposure to Korea's defense industry. We appreciate the support of Exchange Traded Concepts in bringing this ETF to the NYSE Arca."

KDEF aims to mirror the total return performance of the Korea Defense Industry Index. The fund comes with a net expense ratio of 0.65%, which is competitive.

Also Read: Calamos’ New CPSF ETF Offers Growth With A Safety Net

The Korea Defense Industry Index focuses on South Korean companies engaged in defense-related operations. This includes firms specializing in shipbuilding, satellite telecommunications, civil engineering and utility system construction, among other sectors. The new ETF aims to take advantage of this exposure.

To be included in the index, companies must have a minimum market capitalization of at least 300 billion Korean Won—approximately $206 million in U.S. dollars as of February 5, 2025. No single constituent holding is allowed to exceed 20% of the index's overall weighting. KDEF follows the index closely, with at least 80% of its investments allocated to securities within the Korea Defense Industry Index.

Markets Still Resilient Despite Political Uncertainty

Despite the national political dilemma following the unprecedented mid-January arrest of President Yoon Suk Yeol, South Korean markets and the Won remained resilient. The iShares MSCI South Korea ETF, a key indicator for U.S. investors gained the day following his arrest, reflecting investor confidence in the South Korean market.

Additionally, tech companies are turning to South Korea for investing and expansions. For instance, IonQ, Inc. IONQ has expanded its global footprint through a new partnership with the Busan Metropolitan Government in South Korea. The collaboration aims to advance quantum technology and support talent development in the region.

Stability and impressive growth rates make South Korea a key market of interest and the safest route to invest in South Korean securities is through ETFs. Other popular ETFs with exposure to South Korean sectors are Franklin FTSE South Korea ETF FLKR and iShares MSCI South Korea ETF EWY, both of which have gained about 8% year-to-date.

Read Next:

• REIT Winners And Losers: January’s Trends Reshaping 2025

Photo: Shutterstock