Korean Defense ETF leads U.S. market with top returns

Exchange-traded funds (ETFs) are drawing heightened attention across global markets, offering investors diversified exposure to specific sectors or themes with reduced volatility. Among them, defense-themed ETFs are performing especially well, combining strategic value and technological depth. One standout is PLUS KDEF, an ETF focused on Korean defense companies, which was listed on the New York Stock Exchange in February.

Within just three months of launch, PLUS KDEF attracted nearly $29 million in inflows, expanding its market cap by more than 35 times. As of May 27, it was nearing $30 million in total value. The fund also delivered a 31.63% return in just one month (February 11–March 10), earning the top spot among all U.S.-listed equity ETFs during that period—excluding leveraged and inverse products.

Hanwha Asset Management Drives Global Expansion

Hanwha Asset Management spearheaded the development of PLUS KDEF, building on its earlier success in South Korea with the PLUS K-Defense ETF, the country’s first defense-specialized ETF. That fund includes top firms like Hanwha Aerospace, Korea Aerospace Industries (KAI), and LIG Nex1, and reached a net asset value of approximately 790.6 billion won as of May 2025.

The U.S.-listed PLUS KDEF expands on this model, comprising 20 major Korean defense firms, including Hanwha Ocean, Hanwha Systems, and Hyundai Rotem, among others. It offers exposure across land, naval, and aerospace defense sectors, enabling a balanced and diversified investment approach.

PLUS KDEF’s strong performance reflects not just market trends, but also solid earnings from key portfolio companies. In Q1, Hanwha Aerospace posted a 36.6% year-over-year jump in operating profit, while LIG Nex1 recorded a 62.2% increase, highlighting the sector’s rapid growth. These results indicate that Korean defense firms are evolving from parts assemblers to global suppliers with proprietary technologies and production capabilities.

Compared to other defense-themed ETFs, PLUS KDEF’s return outperformed a European defense ETF (27.16%) and a China tech-focused ETF (17.1%), underscoring the fund’s competitive edge.

With careful portfolio construction, PLUS KDEF spreads risk across sub-industries such as armored vehicles, submarines, and aerospace systems. This minimizes reliance on any single company’s performance. The ETF structure allows investors to gain broad exposure to the sector while reducing individual stock volatility.

By listing PLUS KDEF in the U.S., Hanwha Asset Management has created a direct channel for global investors to participate in the rise of K-defense. The fund not only showcases Korea’s defense manufacturing capabilities but also strengthens the country’s financial integration with international markets.

Choi Young-jin, head of marketing at Hanwha Asset Management, emphasized the sector’s long-term potential: “K-defense stands out globally for its advanced technology, fast delivery, and competitive pricing—key factors in today’s defense market shaped by geopolitical risks and supply chain realignments.”

What Is an ETF?

An ETF (Exchange-Traded Fund) is a pooled investment vehicle that combines multiple stocks into a single product, traded on stock exchanges like regular shares. ETFs are popular for their transparency, low fees, and accessibility. Themed ETFs, such as defense-focused funds, allow investors to target specific industries while spreading risk.