SOL K-Defense ETF Surpasses 100 Billion KRW in Net Assets

Shinhan Asset Management announced on August 5 that the 'SOL K-Defense' ETF has surpassed 100 billion KRW in net assets. This represents a growth of more than six times compared to 16.1 billion KRW at the end of last year.

Major holdings such as Hanwha Aerospace, Hanwha Ocean, LIG Nex1, and Korea Aerospace Industries have shown strong performance since the beginning of this year, which has also boosted the returns of the SOL K-Defense ETF. The returns over the past three months, six months, and since the beginning of the year have reached 40.23%, 100.32%, and 142.89%, respectively.

Kim Junghyun, Head of ETF Business at Shinhan Asset Management, stated, "Korea's defense industry, which was previously focused on the domestic market, is now responding to the rapidly expanding global demand for weapons following the Russia-Ukraine war." He added, "The industry is quickly transitioning into an export-driven sector, with exports now accounting for more than 50% of total sales."

He further explained, "Compared to major arms-producing countries such as Germany, France, and Israel, Korea has competitiveness in both the speed of supply and technological capabilities. This is expected to provide continuous growth opportunities amid the global increase in defense spending."

The SOL K-Defense ETF focuses its investments on ten representative stocks in the domestic defense industry value chain. Major holdings include leading defense companies such as Hanwha Aerospace, Korea Aerospace Industries, Hyundai Rotem, and LIG Nex1. The ETF also invests in Hanwha Systems and Intellian Technologies in the communications and electronics sector (radar and antennas), Poongsan in ammunition production, HD Hyundai Heavy Industries and Hanwha Ocean in naval vessels, and Satrec Initiative in satellite launch vehicle development.

Kim emphasized, "While positive trends such as the formalization of export contracts and increases in global defense budgets are expected to benefit the domestic defense industry, there are also risk factors such as global competition to secure demand in Europe. Therefore, it is advisable to approach investments through gradual buying."