[Courtesy of Korea Investment Management]
[Courtesy of Korea Investment Management]

Korea Investment Management announced Monday it will list the ACE K-defense TOP5+ exchange-traded fund on Tuesday, giving investors focused exposure to leading domestic companies in South Korea's advanced defense industry.

The ETF targets companies driving K-defense export expansion and earnings growth, tracking the KRX K-AI Defense TOP5+ index. The fund allocates 80 percent of its weight to the top five AI defense stocks listed on the domestic market by keyword score, with the remaining 20 percent distributed among five additional holdings.

The fund is designed to maximize exposure to core K-defense platform makers and advanced defense infrastructure, encompassing both traditional defense firms and next-generation defense infrastructure to reflect the evolution of modern warfare and the global defense industry.

Stocks expected to make up the top holdings are Hyundai Rotem, LIG Defense & Aerospace, Hanwha Aerospace, Korea Aerospace Industries and Hanwha Systems. Also expected to be included are RFHIC, Satrec Initiative, i3system, Intellian Technologies and Spear — companies holding innovative technologies in future-oriented defense ecosystems such as unmanned systems, drones, military satellites and AI command-and-control systems.

South Korea's major defense companies have posted steadily rising operating profit margins, driven by improved margin quality through active exports. Last year, the combined sales of Hanwha Aerospace, Hyundai Rotem, LIG Defense & Aerospace and Korea Aerospace Industries reached 40.45 trillion won ($26 billion), with operating profit hitting 4.63 trillion won — both all-time highs.

"The defense industry is a growth sector with solid corporate fundamentals underpinned by long-term intergovernmental contracts, with long-term order backlogs translating into proven earnings," said Nam Yong-su, head of the ETF division at Korea Investment Management. "The newly listed ACE K-defense TOP5+ ETF carries South Korea's core defense companies — firms whose performance, price competitiveness and production capacity have been validated amid the global supply chain realignment."


moon@heraldcorp.com