Hanwha PLUS K-Defense ETF Achieves 85% Return So Far This Year

Hanwha Asset Management announced on April 22 that its 'PLUS K-Defense' Exchange Traded Fund (ETF) and 'PLUS Global Defense' ETF have each recorded the highest year-to-date returns in the domestic equity and overseas equity categories, respectively.

According to financial information provider FnGuide, as of April 17, the PLUS K-Defense ETF and PLUS Global Defense ETF have achieved year-to-date returns of 85.22% and 54.13%, respectively. Both ETFs share the commonality of investing in major defense industry-related companies in Korea and overseas (Europe and the United States).

The PLUS K-Defense ETF is attracting attention for being relatively unaffected by the tariff policy recently announced by U.S. President Donald Trump. The majority of companies included in the PLUS K-Defense ETF are currently exporting weapons systems primarily to Europe, the Middle East, and Southeast Asia.

The performance of the constituent companies is also growing rapidly. The securities industry forecasts that this year, the operating profits of Korea's 'Big Four' defense companies?Hanwha Aerospace, KAI, LIG Nex1, and Hyundai Rotem?will surpass 4 trillion won.

This follows last year’s record, when the combined operating profit of the four companies exceeded 2 trillion won for the first time, and indicates that overwhelming growth will continue. In the fourth quarter of last year, Hanwha Aerospace and Hyundai Rotem drew attention by posting exceptionally high operating margins in the 30% range in their overseas defense business segments, a rarity in manufacturing.

European defense companies such as Germany's Rheinmetall and Sweden's Saab, both included in the PLUS Global Defense ETF, have also recently reached all-time high stock prices, and European defense stocks continue to rise. The European Commission is mobilizing approximately 800 billion euros (about 1,290 trillion won) to promote 'rearmament' for European defense, which is expected to drive steady demand.

There is also further upside potential from a supply-demand perspective. Recently, Amundi, the largest asset management company in Europe, has been preparing to launch a European ETF that invests in the defense industry. In Norway, there have been calls within the political sphere to lift restrictions on the Norwegian Sovereign Wealth Fund?which manages approximately 2,300 trillion won, making it the world's largest?so it can invest in defense companies.

President Donald Trump has recently signed an executive order to streamline U.S. arms sales, aiming to maximize the competitiveness and efficiency of American defense companies. Observers note that this move is intended to accelerate weapons sales to overseas customers, increase U.S. profits, strengthen cooperation with allies, and encourage the purchase of U.S.-made weapons by increasing defense spending pressure on allied nations.

Choi Youngjin, Head of Marketing at Hanwha Asset Management, stated, "The defense industry has very high entry barriers, so there are only a limited number of countries worldwide that can export weapons," adding, "This is why investments in the defense industry should be approached from a long-term perspective."

He further commented, "Since weapons systems cannot be easily replaced, attention should be paid to the long-term growth potential of K-Defense, which is diversifying its countries and products beyond Europe, the Middle East, and Southeast Asia to advanced markets."