Hanwha Asset Management Launches New 'PLUS Global Defense' ETF

Hanwha Asset Management announced on the 12th that it will newly list the ‘PLUS Global Defense’ exchange-traded fund (ETF), which invests in global defense companies considered beneficiaries in the Trump 2.0 era.

The ‘PLUS Global Defense’ ETF is a product that focuses on major defense companies in the U.S. and Europe, where the average defense sales ratio reaches 80%, allowing investors to directly benefit from the growth of the defense industry.

As the importance of self-reliant defense expands worldwide, the global defense industry is entering a boom period. Over the past year, the stock prices of 10 representative defense companies in the U.S. and Europe have risen by 27.1% and 45.5%, respectively. Sales are also expected to increase by 8.1% and 17.7% year-on-year, respectively.

‘PLUS Global Defense’ invests in U.S. defense companies, the world’s largest defense market, and rapidly growing European defense companies at a 5 to 5 ratio. The portfolio consists of 10 stocks: five leading U.S. defense companies including Lockheed Martin, RTX, General Dynamics, Northrop Grumman, and L3Harris Technologies, and five leading European defense companies including BAE Systems, Rheinmetall, Thales, Leonardo, and Saab, each equally weighted at 10%.

Hanwha Asset Management particularly focused on European defense companies. Recent inter-state conflicts in Europe, accompanied by actual armed clashes, have rapidly improved the performance of European defense companies, which have a high proportion of conventional weapons.

BAE Systems, a leading British defense company with a market capitalization of approximately 70 trillion KRW, has a product portfolio covering air, sea, and land weapon systems such as aircraft, ships, and ground weapons. It has established cooperative frameworks with NATO countries and allies and is actively engaged in developing advanced technologies such as artificial intelligence, cybersecurity, drones, and automation systems.

France’s Thales, which co-developed the ‘SMAP/T’ air defense missile system with Italy, operates in more than 55 countries worldwide and has a market capitalization of about 47 trillion KRW. It actively pursues technology development through R&D investment and has been selected as one of the world’s top 100 innovative companies for several years.

Germany’s Rheinmetall produces the ‘PzH 2000’ self-propelled howitzer, considered one of the world’s best-performing artillery systems alongside Hanwha Aerospace’s K9 self-propelled howitzer. With a market capitalization of about 32 trillion KRW, it possesses outstanding technology in combat vehicles and weapon systems.

Recently, the European Commission (EC) announced the ‘European Defense Industrial Strategy,’ aiming to reduce high external dependence and promote EU-led defense industry development. By setting concrete goals to expand the defense industry scale within Europe, European defense companies are expected to benefit.

The U.S., which exports more than 40% of the world’s weapons, is the largest defense market globally. It has a stable sales base through excellent advanced technology and economies of scale, providing price competitiveness. This year, the U.S. defense budget was set at $842 billion, a 3.2% increase from the previous year. Next year’s defense budget is also planned to increase by 1% year-on-year, continuing the upward trend.

Choi Young-jin, Head of Strategy Business Division at Hanwha Asset Management, said, “With global conflicts and disputes intensifying from Europe to the Middle East and the South China Sea becoming the new normal, the need for self-reliant defense will inevitably increase. Especially, the election of U.S. candidate Trump will accelerate this trend further, and the overall scale of the defense industry is expected to expand.”